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OFFON

PAR PACIFIC HOLDINGS, INC.

(PARR)
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PAR PACIFIC : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

05/07/2021 | 01:33pm EDT

Overview

We are a growth-oriented company based in Houston, Texas, that owns and operates market-leading energy and infrastructure businesses.

  Our business is organized into three primary 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 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.
Laramie Energy is focused on producing natural gas in Garfield, Mesa, and Rio
Blanco Counties, Colorado.
  We have four reportable segments: (i) Refining, (ii) Retail, (iii) Logistics,
and (iv) Corporate and Other. Our Corporate and Other reportable segment
primarily includes general and administrative costs. Please read Note 17-Segment
Information to our condensed consolidated financial statements included in this
Quarterly Report on Form 10-Q for detailed information on our operating results
by segment.
Recent Events Affecting Comparability of Periods
  The spread of COVID-19, in conjunction with related government and other
preventative measures taken to mitigate the spread of the virus, has caused
severe disruptions in the worldwide economy, including the global demand for
crude oil and refined products, the movement of people and goods in the United
States, and the global supply chain for industrial and commercial production,
all of which have in turn disrupted our businesses and operations. In December
2020 and February 2021, the U.S. Food & Drug Administration granted Emergency
Use Authorization ("EUA") for three vaccines to be distributed in the United
States. On April 2, 2021, the Centers for Disease Control and Prevention ("CDC")
announced that individuals who are fully vaccinated can travel domestically at
low risk to themselves, though they should still wear masks and adhere to social
distancing guidelines and travel is still not recommended.
  In addition to measures we took in 2020 in response to the COVID-19 pandemic,
as described in our Annual Report on Form 10-K for the year ended December 31,
2020, we have also undertaken additional liquidity-enhancing measures, including
deferring or delaying certain capital expenditures related to turnaround
activities at our Washington refinery. We closed sale-leaseback transactions in
the first quarter of 2021, in which we sold twenty-two (22) retail convenience
store/fuel station properties located in Hawaii (the "Sale-Leaseback
Properties") for a net purchase price of $112.8 million. We also entered into a
lease on the properties for fifteen (15) years, unless earlier terminated, with
up to four 5-year renewal options. On March 19, 2021, we sold 5.75 million
shares of common stock in an underwritten public offering at a public offering
price of $16.00 per share resulting in net proceeds to us of approximately
$87.4 million, after deducting underwriting discounts and commissions and
offering expenses.
We believe the steps we have taken throughout 2020 and more recently in the
first quarter of 2021 have strengthened our ability to conduct our operations
through current conditions. We are also utilizing some of the tax payment
deferral opportunities and federal refund acceleration opportunities provided by
the Internal Revenue Service ("IRS"), Coronavirus Aid, Relief, and Economic
Security Act ("CARES Act"), and various state-specific provisions. We continue
to maintain existing processes and procedures, including but not limited to
processes and procedures around protection of our technology systems and
proprietary data, even though a significant number of our employees are working
from home. The health and wellbeing of our employees and customers continue to
be our top priorities as we continue navigating the challenges presented by the
COVID-19 pandemic.
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  The financial results contained in this Quarterly Report on Form 10-Q reflect
the continuing pandemic-related demand suppression experienced in the first
quarter of 2021 in the regions in which we operate. Though vaccine availability
is increasing, the COVID-19 pandemic is ongoing and the impacts of the virus on
people and businesses continue to evolve as of the date of this report. We
continue to actively monitor the impact of the global situation on our people,
operations, financial condition, liquidity, suppliers, customers, and industry.
Due to the rapid development and fluidity of the situation, the full magnitude
of the impact of COVID-19 on our financial condition, future results of
operations, and future cash flows and liquidity is uncertain and has been and
may continue to be material.
Results of Operations
Three months ended March 31, 2021 compared to the three months ended March 31,
2020
  Net Loss. Our financial results for the first quarter of 2021 improved from a
net loss of $222.3 million for the three months ended March 31, 2020 to a net
loss of $62.2 million for the three months ended March 31, 2021. The increase
was primarily driven by a gain of $64.9 million primarily related to the
Sale-Leaseback Transaction we closed on February 23, 2021 and March 12, 2021,
our 2020 goodwill impairment of $67.9 million related to our Refining and Retail
segments, and our 2020 other-than-temporary impairment of $45.3 million related
to our equity investment in Laramie Energy, and a $193.0 million favorable
change in lower of cost or net realizable value adjustments, partially offset by
a 28% decrease in refining sales volumes, unfavorable crack spreads primarily
due to decreased demand as a result of the COVID-19 pandemic, and an increase in
the RINs mark-to-market expense driven by higher RINs prices.
  Adjusted EBITDA and Adjusted Net Loss. For the three months ended March 31,
2021, Adjusted EBITDA was a loss of $43.3 million compared to earnings of
$13.7 million for the three months ended March 31, 2020. The decrease was
primarily related to unfavorable crack spreads and lower sales volumes across
our operating segments related to COVID-19 demand destruction, and RINs
mark-to-market expense driven by higher RINs prices, partially offset by
favorable feedstock costs in Hawaii.
  For the three months ended March 31, 2021, Adjusted Net Loss was a loss of
$84.4 million compared to a loss of $27.3 million for the three months ended
March 31, 2020. The decrease was primarily related to the factors described
above for the decrease in Adjusted EBITDA.
                                       29
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  The following tables summarize our consolidated results of operations for the
three months ended March 31, 2021 compared to the three months ended March 31,
2020 (in thousands). The following should be read in conjunction with our
condensed consolidated financial statements and notes thereto included elsewhere
in this Quarterly Report on Form 10-Q.
                                                   Three Months Ended March 31,
                                                    2021                   2020              $ Change           % Change (1)
Revenues                                      $      888,680          $ 1,204,083          $ (315,403)                  (26) %
Cost of revenues (excluding depreciation)            888,863            1,210,211            (321,348)                  (27) %

Operating expense (excluding depreciation)            74,188               73,391                 797                     1  %
Depreciation, depletion, and amortization             22,880               21,283               1,597                     8  %
Impairment expense                                         -               67,922             (67,922)                 (100) %
Loss (gain) on sale of assets, net                   (64,912)                   -             (64,912)                      NM
General and administrative expense (excluding
depreciation)                                         11,885               11,784                 101                     1  %
Acquisition and integration costs                        438                  665                (227)                  (34) %
Total operating expenses                             933,342            1,385,256
Operating loss                                       (44,662)            (181,173)
Other income (expense)
Interest expense and financing costs, net            (18,151)             (18,674)                523                     3  %
Debt extinguishment and commitment costs              (1,507)                   -              (1,507)                      NM
Gain on curtailment of pension obligation              2,032                    -               2,032                       NM
Other income, net                                         61                   24                  37                   154  %
Change in value of common stock warrants                   -                4,270              (4,270)                 (100) %

Equity losses from Laramie Energy, LLC                     -              (45,031)             45,031                   100  %
Total other income (expense), net                    (17,565)             

(59,411)

Loss before income taxes                             (62,227)            

(240,584)

Income tax benefit (expense)                               -               18,247             (18,247)                 (100) %
Net loss                                      $      (62,227)         $  (222,337)

________________________________________________________

(1) NM - Not meaningful

  The following tables summarize our operating income (loss) by segment for the
three months ended March 31, 2021 and 2020 (in thousands). The following should
be read in conjunction with our condensed consolidated financial statements and
notes thereto included elsewhere in this Quarterly Report on Form 10-Q.
                                                                                                                  Corporate,
                                                                                                               Eliminations and
Three months ended March 31, 2021           Refining          Logistics           Retail                           Other (1)               Total
Revenues                                  $ 838,755          $  41,309          $ 91,188                      $        (82,572)         $ 888,680
Cost of revenues (excluding
depreciation)                               883,477             22,082            65,872                               (82,568)           888,863

Operating expense (excluding
depreciation)                                53,338              3,896            16,954                                     -             74,188
Depreciation, depletion, and
amortization                                 14,064              5,254             2,660                                   902             22,880
Impairment expense                                -                  -                 -                                     -                  -
Loss (gain) on sale of assets, net          (21,259)                 -           (43,653)                                    -            (64,912)
General and administrative expense
(excluding depreciation)                          -                  -                 -                                11,885             11,885
Acquisition and integration costs                 -                  -                 -                                   438                438
Operating income (loss)                   $ (90,865)         $  10,077          $ 49,355                      $        (13,229)         $ (44,662)


                                       30
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                                                                                                                     Corporate,
                                                                                                                  Eliminations and
Three months ended March 31, 2020            Refining           Logistics            Retail                          Other (1)                Total
Revenues                                  $ 1,148,126          $  59,150          $ 102,813                      $      (106,006)         $ 1,204,083
Cost of revenues (excluding
depreciation)                               1,213,353             31,436             71,430                             (106,008)           1,210,211

Operating expense (excluding
depreciation)                                  52,244              4,271             16,876                                    -               73,391
Depreciation, depletion, and
amortization                                   12,994              4,667              2,799                                  823               21,283
Impairment expense                             38,105                  -             29,817                                    -               67,922
Loss (gain) on sale of assets, net                  -                  -                  -                                    -                    -
General and administrative expense
(excluding depreciation)                            -                  -                  -                               11,784               11,784
Acquisition and integration costs                   -                  -                  -                                  665                  665
Operating income (loss)                   $  (168,570)         $  18,776          $ (18,109)                     $       (13,270)         $  (181,173)

________________________________________________________

(1)Includes eliminations of intersegment Revenues and Cost of revenues (excluding depreciation) of $82.6 million and $106.0 million for the three months ended March 31, 2021 and 2020, respectively.

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Below is a summary of key operating statistics for the refining segment for the three months ended March 31, 2021 and 2020:

                                                                Three Months Ended March 31,
                                                                2021                     2020
Total Refining Segment
Feedstocks Throughput (Mbpd)                                       127.4                    151.5
Refined product sales volume (Mbpd)                                130.0                    179.7

Hawaii Refineries
Combined Feedstocks Throughput (Mbpd)                               81.2                     94.9
Par East Throughput (Mbpd)                                          81.2                     69.8
Par West Throughput (Mbpd)                                             -                     25.1

Yield (% of total throughput)
Gasoline and gasoline blendstocks                                   24.7   %                 24.7  %
Distillates                                                         42.9   %                 48.1  %
Fuel oils                                                           27.6   %                 22.3  %
Other products                                                       1.5   %                  0.6  %
Total yield                                                         96.7   %                 95.7  %

Refined product sales volume (Mbpd)
On-island sales volume                                              77.7                    119.5
Exports sales volume                                                   -                        -
Total refined product sales volume                                  77.7                    119.5

Adjusted Gross Margin per bbl ($/throughput bbl) (1) $ (0.46)

        $         0.24
Production costs per bbl ($/throughput bbl) (2)                     3.97                     3.36
DD&A per bbl ($/throughput bbl)                                     0.68                     0.33

Washington Refinery
Feedstocks Throughput (Mbpd)                                        31.6                     40.9
Yield (% of total throughput)
Gasoline and gasoline blendstocks                                   24.5   %                 23.4  %
Distillates                                                         36.2   %                 35.5  %

Asphalt                                                             18.0   %                 18.0  %
Other products                                                      18.7   %                 19.4  %
Total yield                                                         97.4   %                 96.3  %

Refined product sales volume (Mbpd)                                 39.2                     43.7

Adjusted Gross Margin per bbl ($/throughput bbl) (1) $ (1.33)

        $         9.94
Production costs per bbl ($/throughput bbl) (2)                     4.36                     3.40
DD&A per bbl ($/throughput bbl)                                     1.77                     1.42


                                       32
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                                                                Three Months Ended March 31,
                                                                2021                     2020
Wyoming Refinery
Feedstocks Throughput (Mbpd)                                        14.6                     15.7
Yield (% of total throughput)
Gasoline and gasoline blendstocks                                   49.0   %                 51.0  %
Distillates                                                         45.0   %                 44.7  %
Fuel oils                                                            1.4   %                  1.6  %
Other products                                                       1.2   %                  0.6  %
Total yield                                                         96.6   %                 97.9  %

Refined product sales volume (Mbpd)                                 13.1                     16.5

Adjusted Gross Margin per bbl ($/throughput bbl) (1) $ 2.35

        $        (0.81)
Production costs per bbl ($/throughput bbl) (2)                     8.10                     6.51
DD&A per bbl ($/throughput bbl)                                     3.11                     3.40

Market Indices (average $ per barrel)


3-1-2 Singapore Crack Spread (3)                         $          3.80           $         8.11
Pacific Northwest 5-2-2-1 Index (4)                                11.46                    13.24
Wyoming 3-2-1 Index (5)                                            20.97                    15.86

Crude Oil Prices ($ per barrel)
Brent                                                    $         61.32           $        50.82
WTI                                                                58.14                    45.98
ANS                                                                61.65                    52.27
Bakken Clearbrook                                                  57.60                    42.67
WCS Hardisty                                                       46.16                    27.96
Brent M1-M3                                                         0.81                    (0.54)

________________________________________________________

(1)We calculate Adjusted Gross Margin per barrel by dividing Adjusted Gross
Margin by total refining throughput. Adjusted Gross Margin for our Washington
refinery is determined under the last-in, first-out ("LIFO") inventory costing
method. Adjusted Gross Margin for our other refineries is determined under the
first-in, first-out ("FIFO") inventory costing method. Please see discussion of
Adjusted Gross Margin below.
(2)Management uses production costs per barrel to evaluate performance and
compare efficiency to other companies in the industry. There are a variety of
ways to calculate production costs per barrel; different companies within the
industry calculate it in different ways. We calculate production costs per
barrel by dividing all direct production costs, which include the costs to run
the refineries including personnel costs, repair and maintenance costs,
insurance, utilities, and other miscellaneous costs, by total refining
throughput. Our production costs are included in Operating expense (excluding
depreciation) on our condensed consolidated statement of operations, which also
includes costs related to our bulk marketing operations.
(3)In 2020, following the implementation of IMO 2020, we established the 3-1-2
Singapore Crack Spread (or three barrels of Brent crude oil converted into one
barrel of gasoline and two barrels of distillates (diesel and jet fuel)) as a
new benchmark for our Hawaii operations. By removing the high sulfur fuel oil
reference in the index, we believe the 3-1-2 Singapore Crack Spread is the most
representative market indicator of our current operations in Hawaii.
(4)We believe the Pacific Northwest 5-2-2-1 Index is the most representative
market indicator for our operations in Tacoma, Washington. The Pacific Northwest
5-2-2-1 Index is computed by taking two parts gasoline (sub-octane), two parts
middle distillates (ULSD and jet fuel), and one part fuel oil as created from
five barrels of Alaskan North Slope ("ANS") crude oil.
                                       33
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(5)The profitability of our Wyoming refinery is heavily influenced by crack
spreads in nearby markets. We believe the Wyoming 3-2-1 Index is the most
representative market indicator for our operations in Wyoming. The Wyoming 3-2-1
Index is computed by taking two parts gasoline and one part distillates (ULSD)
as created from three barrels of West Texas Intermediate Crude Oil ("WTI").
Pricing is based 50% on applicable product pricing in Rapid City, South Dakota,
and 50% on applicable product pricing in Denver, Colorado.

Below is a summary of key operating statistics for the retail segment for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31,

                                                                 2021                                   2020
Retail Segment
Retail sales volumes (thousands of gallons)                        24,801                                    28,441


Non-GAAP Performance Measures
Management uses certain financial measures to evaluate our operating performance
that are considered non-GAAP financial measures. These measures should not be
considered a substitute for, or superior to, measures of financial performance
prepared in accordance with GAAP and our calculations thereof may not be
comparable to similarly titled measures reported by other companies.
Adjusted Gross Margin
  Adjusted Gross Margin is defined as (i) operating income (loss) plus operating
expense (excluding depreciation), impairment expense, inventory valuation
adjustment (which adjusts for timing differences to reflect the economics of our
inventory financing agreements, including lower of cost or net realizable value
adjustments, the impact of the embedded derivative repurchase or terminal
obligations, and purchase price allocation adjustments), depreciation,
depletion, and amortization ("DD&A"); Renewable Identification Numbers ("RINs")
loss (gain) in excess of net obligation (which represents the income statement
effect of reflecting our RINs liability on a net basis), (gain) loss on sale of
assets, and unrealized loss (gain) on derivatives or (ii) revenues less cost of
revenues (excluding depreciation) plus inventory valuation adjustment,
unrealized loss (gain) on derivatives, and RINs loss (gain) in excess of net
obligation. We define cost of revenues (excluding depreciation) as the
hydrocarbon-related costs of inventory sold, transportation costs of delivering
product to customers, crude oil consumed in the refining process, costs to
satisfy our RINs and environmental credit obligations, and certain hydrocarbon
fees and taxes. Cost of revenues (excluding depreciation) also includes the
unrealized gain (loss) on derivatives and the inventory valuation adjustment
that we exclude from Adjusted Gross Margin. Beginning in the second quarter of
2020, Adjusted Gross Margin also includes the contango gains and backwardation
losses associated with our Washington inventory and intermediation obligation.
Prior to 2020, contango gains and backwardation (losses) captured by our
Washington intermediation agreement were excluded from Adjusted Gross Margin (as
part of the inventory valuation adjustment). This change to our non-GAAP
information was made to reflect the favorable or unfavorable impact of the
market structure on the profitability of our Washington refinery consistent with
the presentation of such impacts on our other refineries. Also beginning in the
third quarter of 2020, Adjusted Gross Margin excludes the LIFO layer liquidation
impacts associated with our Washington inventory. We have recast the non-GAAP
information for the three months ended March 31, 2020 to conform to the current
period presentation.
Management believes Adjusted Gross Margin is an important measure of operating
performance and uses Adjusted Gross Margin per barrel to evaluate operating
performance and compare profitability to other companies in the industry and to
industry benchmarks. Management believes Adjusted Gross Margin provides useful
information to investors because it eliminates the gross impact of volatile
commodity prices and adjusts for certain non-cash items and timing differences
created by our inventory financing agreements and lower of cost and net
realizable value adjustments to demonstrate the earnings potential of the
business before other fixed and variable costs, which are reported separately in
Operating expense (excluding depreciation) and Depreciation, depletion, and
amortization.
Adjusted Gross Margin should not be considered an alternative to operating
income (loss), cash flows from operating activities, or any other measure of
financial performance or liquidity presented in accordance with GAAP. Adjusted
Gross Margin presented by other companies may not be comparable to our
presentation since each company may define this term differently as they may
include other manufacturing costs and depreciation expense in cost of revenues.
                                       34
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  The following tables present a reconciliation of Adjusted Gross Margin to the
most directly comparable GAAP financial measure, operating income (loss), on a
historical basis, for selected segments, for the periods indicated (in
thousands):
      Three months ended March 31, 2021             Refining       

Logistics Retail

      Operating income (loss)                      $ (90,865)     $  10,077      $ 49,355
      Operating expense (excluding depreciation)      53,338          3,896        16,954
      Depreciation, depletion, and amortization       14,064          5,254         2,660

      Loss (gain) on sale of assets, net             (21,259)             -       (43,653)
      Inventory valuation adjustment                  14,175              -             -
      LIFO liquidation adjustment                      1,888              -             -
      RINs loss in excess of net obligation           28,770              -             -
      Unrealized gain on derivatives                  (4,012)             -             -
      Adjusted Gross Margin (1)                    $  (3,901)     $  19,227      $ 25,316


     Three months ended March 31, 2020              Refining      

Logistics Retail

     Operating income (loss)                      $ (168,570)     $  18,776      $ (18,109)
     Operating expense (excluding depreciation)       52,244          4,271         16,876

     Depreciation, depletion, and amortization        12,994          4,667          2,799
     Impairment expense                               38,105              -         29,817

     Inventory valuation adjustment                   75,324              -              -

     RINs loss in excess of net obligation             6,602              -              -
     Unrealized loss on derivatives                   22,876              -              -
     Adjusted Gross Margin (2)                    $   39,575      $  27,714      $  31,383

____________________________________________________________________________

(1)For the three months ended March 31, 2021, there was no impairment expense.
(2)For the three months ended March 31, 2020, there was no LIFO liquidation
adjustment or loss (gain) on sale of assets.
Adjusted Net Income (Loss) and Adjusted EBITDA
  Adjusted Net Income (Loss) is defined as Net income (loss) excluding changes
in the value of contingent consideration and common stock warrants, acquisition
and integration costs, unrealized (gain) loss on derivatives, debt
extinguishment and commitment costs, increase in (release of) tax valuation
allowance and other deferred tax items, inventory valuation adjustment,
severance costs, impairment expense, (gain) loss on sale of assets, Par's share
of Laramie Energy's unrealized loss (gain) on derivatives, RINs loss (gain) in
excess of net obligation, and impairment expense associated with our investment
in Laramie Energy and our share of Laramie Energy's asset impairment losses in
excess of our basis difference. Beginning in the second quarter of 2020,
Adjusted Net Income (Loss) also includes the contango gains and backwardation
losses associated with our Washington inventory and intermediation obligation.
Prior to 2020, contango gains and backwardation (losses) captured by our
Washington intermediation agreement were excluded from Adjusted Net Income
(Loss) (as part of the inventory valuation adjustment). This change to our
non-GAAP information was made to reflect the favorable or unfavorable impact of
the market structure on the profitability of our Washington refinery consistent
with the presentation of such impacts on our other refineries. Also beginning in
the third quarter of 2020, Adjusted Net Income (Loss) excludes the LIFO layer
liquidation impacts associated with our Washington inventory. We have recast the
non-GAAP information for the three months ended March 31, 2020 to conform to the
current period presentation.
Adjusted EBITDA is Adjusted Net Income (Loss) excluding interest expense and
financing costs, income taxes, DD&A, and equity losses (earnings) from Laramie
Energy, excluding Par's share of unrealized loss (gain) on derivatives,
impairment of Par's investment, and our share of Laramie Energy's asset
impairment losses in excess of our basis difference.
We believe Adjusted Net Income (Loss) and Adjusted EBITDA are useful
supplemental financial measures that allow investors to assess:
•The financial performance of our assets without regard to financing methods,
capital structure, or historical cost basis;
•The ability of our assets to generate cash to pay interest on our indebtedness;
and
                                       35
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•Our operating performance and return on invested capital as compared to other
companies without regard to financing methods and capital structure.
Adjusted Net Income (Loss) and Adjusted EBITDA should not be considered in
isolation or as a substitute for operating income (loss), net income (loss),
cash flows provided by operating, investing, and financing activities, or other
income or cash flow statement data prepared in accordance with GAAP. Adjusted
Net Income (Loss) and Adjusted EBITDA presented by other companies may not be
comparable to our presentation as other companies may define these terms
differently.

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

                                                                     Three Months Ended March 31,
                                                                      2021                   2020
Net Income (Loss)                                               $      (62,227)         $   (222,337)
Inventory valuation adjustment                                          14,175                75,324
LIFO liquidation adjustment                                              1,888                     -
RINs loss in excess of net obligation                                   28,770                 6,602
Unrealized loss (gain) on derivatives                                   (4,012)               22,876
Acquisition and integration costs                                          438                   665
Debt extinguishment and commitment costs                                 1,507                     -

Changes in valuation allowance and other deferred tax items (1)

                                                                          -               (18,373)
Change in value of common stock warrants                                     -                (4,270)

Severance costs                                                             16                   149
Gain on sale of assets, net                                            (64,912)                    -
Impairment expense                                                           -                67,922
Impairment of Investment in Laramie Energy, LLC (2)                          -                45,294

Par's share of Laramie Energy's unrealized loss (gain) on derivatives (2)

                                                              -                (1,110)
Adjusted Net Loss (3)                                                  (84,357)              (27,258)
Depreciation, depletion, and amortization                               22,880                21,283
Interest expense and financing costs, net                               18,151                18,674

Equity losses (earnings) from Laramie Energy, LLC, excluding Par's share of unrealized loss (gain) on derivatives and impairment losses

                                                            -                   847
Income tax expense (benefit)                                                 -                   126
Adjusted EBITDA                                                 $      (43,326)         $     13,672

________________________________________

(1)Includes increases in (releases of) our valuation allowance associated with
business combinations and changes in deferred tax assets and liabilities that
are not offset by a change in the valuation allowance. These tax expenses
(benefits) are included in Income tax benefit on our condensed consolidated
statements of operations.
(2)Included in Equity losses from Laramie Energy, LLC on our condensed
consolidated statements of operations.
(3)For the three months ended March 31, 2021 and 2020, there was no change in
value of contingent consideration.
Factors Impacting Segment Results
Three months ended March 31, 2021 compared to the three months ended March 31,
2020
  Refining. Operating loss for our refining segment was $90.9 million for the
three months ended March 31, 2021, an increase of $77.7 million compared to
operating loss of $168.6 million for the three months ended March 31, 2020. The
increase in profitability was primarily driven by a $193.0 million favorable
change in lower of cost or net realizable value adjustments and favorable
feedstock costs at our Hawaii refinery, partially offset by a 28% decrease in
sales volume, a $72.0 million increase in RINs mark-to-market expense related to
our gross RINs obligation, and unfavorable crack spreads primarily
                                       36
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due to decreased demand as a result of the COVID-19 pandemic. Other factors
impacting our results period over period include a $7.3 million favorable FIFO
impact in 2021 compared to a $15.0 million unfavorable FIFO impact in the same
period in 2020 at our Wyoming refinery, our 2020 goodwill impairment of $38.1
million, and a 2021 gain of $21.3 million primarily related to the
sale-leaseback transactions we closed on February 23, 2021 and March 12, 2021.
  Logistics. Operating income for our logistics segment was $10.1 million for
the three months ended March 31, 2021, a decrease of $8.7 million compared to
operating income of $18.8 million for the three months ended March 31, 2020. The
decrease is due to a net 28% and 12% lower throughput across our Hawaii and
Washington logistics assets, respectively, primarily due to decreased demand as
a result of the COVID-19 pandemic and Washington refinery turnaround activities.
  Retail. Operating income for our retail segment was $49.4 million for the
three months ended March 31, 2021, an increase of $67.5 million compared to
operating loss of $18.1 million for the three months ended March 31, 2020. The
increase was primarily due to our 2020 goodwill impairment of $29.8 million with
no corresponding impairment in 2021 and a gain of $43.7 million primarily
related to the sale-leaseback transactions we closed on February 23, 2021 and
March 12, 2021.
Adjusted Gross Margin
Three months ended March 31, 2021 compared to the three months ended March 31,
2020
  Refining. For the three months ended March 31, 2021, our refining Adjusted
Gross Margin was a loss of $3.9 million, a decrease of $43.5 million compared to
income of $39.6 million for the three months ended March 31, 2020. The decrease
was primarily driven by a 28% decline in refining sales volumes, unfavorable
crack spreads in Hawaii and Washington, and a $46.9 million RINs mark-to-market
expense related to the 2019 and 2020 net obligations due to increasing RINs
prices, partially offset by favorable feedstock costs. Adjusted Gross Margin for
the Hawaii refineries decreased from $0.24 per barrel during the three months
ended March 31, 2020 to a loss of $0.46 per barrel during the three months ended
March 31, 2021 primarily due to a 35% decrease in sales volume, a $26.1 million
RINs mark-to-market expense, and unfavorable crack spreads, partially offset by
favorable feedstock costs. Adjusted Gross margin for the Wyoming refinery
decreased $3.16 per barrel primarily due to a 21% decrease in sales volume and
an $11.2 million RINs mark-to-market expense. Adjusted Gross Margin for the
Washington refinery decreased $11.27 per barrel primarily due to declining crack
spreads, a $9.6 million RINs mark-to-market expense, and a 10% decrease in sales
volumes.
  Logistics. For the three months ended March 31, 2021, our logistics Adjusted
Gross Margin was $19.2 million, a decrease of $8.5 million compared to
$27.7 million for the three months ended March 31, 2020. The decrease is due to
a net 28% and 12% lower throughput across our Hawaii and Washington logistics
assets, respectively, primarily due to decreased demand as a result of the
COVID-19 pandemic and Washington refinery turnaround activities.
  Retail. For the three months ended March 31, 2021, our retail Adjusted Gross
Margin was $25.3 million, a decrease of $6.1 million when compared to
$31.4 million for the three months ended March 31, 2020. The decrease was
primarily due to a 15% decrease in fuel margins related to rising crude prices
and a 13% decline in sales volumes.
Discussion of Consolidated Results
Three months ended March 31, 2021 compared to the three months ended March 31,
2020
  Revenues. For the three months ended March 31, 2021, revenues were $0.9
billion, a $0.3 billion decrease compared to $1.2 billion for the three months
ended March 31, 2020. The decrease was primarily due to a decrease of $0.3
billion in third-party refining segment revenue as a result of a 28% decrease in
refining sales volumes and a decrease in average product cracks, partially
offset by an increase in refined product prices related to higher crude oil
prices. Brent crude oil prices improved to $61.32 per barrel during the first
quarter of 2021 compared to $50.82 per barrel during the first quarter of 2020,
and WTI crude oil prices improved to $58.14 per barrel during the first quarter
of 2021 compared to $45.98 per barrel during the first quarter of 2020.
  Cost of Revenues (Excluding Depreciation). For the three months ended March
31, 2021, cost of revenues (excluding depreciation) was $0.9 billion, a $0.3
billion decrease compared to $1.2 billion for the three months ended March 31,
2020. The decrease was primarily driven by lower refining volumes as discussed
above, a $193.0 million favorable change in in lower of cost or net realizable
value adjustments, and a decrease in purchased products volumes, partially
offset by increases to cost of revenues caused by higher Brent and WTI crude oil
prices, and a $72.0 million increase in the RINs mark-to-market expense related
to our gross RINs obligation. Other factors impacting our results period over
period are lower purchased product, feedstock, and logistics costs and
unfavorable derivative activity.
                                       37
--------------------------------------------------------------------------------

  Operating Expense (Excluding Depreciation). For the three months ended March
31, 2021, operating expense (excluding depreciation) was $74.2 million, which
was relatively consistent with $73.4 million for the three months ended March
31, 2020.
  Depreciation, Depletion, and Amortization. For the three months ended March
31, 2021, DD&A was $22.9 million, which was relatively consistent with $21.3
million for the three months ended March 31, 2020.
Impairment Expense. During the three months ended March 31, 2020, we recorded
goodwill impairment charges of $67.9 million related to our Refining and Retail
segments as a result of the global economic impact of the COVID-19 pandemic and
a steep decline in current and forecasted prices and demand for crude oil and
refined products. No such charge was recorded in 2021.
Gain on Sale of Assets. During the three months ended March 31, 2021, we
recorded a gain of $64.9 million primarily related to the Sale-Leaseback
Transaction we closed on February 23, 2021 and March 12, 2021. No such gain or
loss was recorded during the three months ended March 31, 2020.

General and Administrative Expense (Excluding Depreciation). For the three months ended March 31, 2021, general and administrative expense (excluding depreciation) was $11.9 million, which was relatively consistent with $11.8 million for the three months ended March 31, 2020.

  Interest Expense and Financing Costs, Net. For the three months ended March
31, 2021, our interest expense and financing costs were $18.2 million,
relatively consistent with $18.7 million for the three months ended March 31,
2020.
  Change in Value of Common Stock Warrants. For the three months ended March 31,
2020, the change in value of common stock warrants resulted in income of $4.3
million. During January and March 2020, one of our stockholders and its
affiliates exercised the remaining 354,350 common stock warrants in exchange for
350,542 shares of common stock. We estimated the fair value of our outstanding
common stock warrants using the difference between the strike price of the
warrant and the market price of our common stock. During the three months ended
March 31, 2020, our stock price decreased from $23.24 per share as of
December 31, 2019 to $7.10 per share as of March 31, 2020. During the three
months ended March 31, 2021, there were no common stock warrants outstanding.
  Equity Earnings from Laramie Energy, LLC. For the three months ended March 31,
2021, there were no equity earnings (losses) from Laramie Energy, compared to
equity losses of $45.0 million for the three months ended March 31, 2020. As of
June 30, 2020, we discontinued the application of the equity method of
accounting for our investment in Laramie Energy because the book value of such
investment has been reduced to zero. Please read Note 3-Investment in Laramie
Energy, LLC for further information.
  Income Taxes. For the three months ended March 31, 2021, we did not record any
income taxes. For the three months ended March 31, 2020, we recorded an income
tax benefit of $18.2 million primarily driven by a $18.4 million benefit
associated with a partial release of our valuation allowance in connection with
indefinite-lived deferred tax assets from interest expense carryforwards with no
expiration.
                                       38
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Consolidating Condensed Financial Information

  On December 21, 2017, Par Petroleum, LLC (the "Issuer") issued its 7.75%
Senior Secured Notes due 2025 in a private offering under Rule 144A and
Regulation S of the Securities Act. On January 11, 2019, the Issuers (defined
below) entered into a term loan and guaranty agreement with Goldman Sachs Bank
USA, as administrative agent, and the lenders party thereto with respect to a
$250.0 million term loan (the "Term Loan B"). On June 5, 2020, the Issuers
issued their 12.875% Senior Secured Notes due 2026 in a private offering under
Rule 144A and Regulation S of the Securities Act. The 7.75% Senior Secured
Notes, the Term Loan B, and the 12.875% Senior Secured Notes were co-issued by
Par Petroleum Finance Corp. (together with the Issuer, the "Issuers"), which has
no independent assets or operations. The 7.75% Senior Secured Notes, Term Loan
B, and 12.875% Senior Secured Notes are guaranteed on a senior unsecured basis
only as to payment of principal and interest by Par Pacific Holdings, Inc. (the
"Parent") and are guaranteed on a senior secured basis by all of the
subsidiaries of Par Petroleum, LLC.
  The following supplemental condensed consolidating financial information
reflects (i) the Parent's separate accounts, (ii) Par Petroleum, LLC and its
consolidated subsidiaries' accounts (which are all guarantors of the 7.75%
Senior Secured Notes, Term Loan B, and 12.875% Senior Secured Notes), (iii) the
accounts of subsidiaries of the Parent that are not guarantors of the 7.75%
Senior Secured Notes, Term Loan B, or 12.875% Senior Secured Notes and
consolidating adjustments and eliminations, and (iv) the Parent's consolidated
accounts for the dates and periods indicated. For purposes of the following
condensed consolidating information, the Parent's investment in its subsidiaries
is accounted for under the equity method of accounting (dollar amounts in
thousands).
                                       39
--------------------------------------------------------------------------------

                                                                                As of March 31, 2021
                                                                                             Non-Guarantor              Par Pacific
                                                  Parent              Issuer and            Subsidiaries and          Holdings, Inc.
                                                 Guarantor           Subsidiaries             Eliminations           and Subsidiaries
                    ASSETS
Current assets
Cash and cash equivalents                      $    3,539          $     209,921          $           1,273          $      214,733
Restricted cash                                       330                  1,670                          -                   2,000
Trade accounts receivable                               -                155,883                          3                 155,886
Inventories                                             -                579,206                          -                 579,206
Prepaid and other current assets                   13,123                 11,296                        494                  24,913
Due from related parties                           90,629                      -                    (90,629)                      -
Total current assets                              107,621                957,976                    (88,859)                976,738
Property, plant, and equipment
Property, plant, and equipment                     21,595              1,132,886                      3,957               1,158,438

Less accumulated depreciation, depletion, and
amortization                                      (15,034)              (251,446)                    (2,786)               (269,266)
Property, plant, and equipment, net                 6,561                881,440                      1,171                 889,172
Long-term assets
Operating lease right-of-use assets                 3,567                424,010                          -                 427,577

Investment in subsidiaries                        256,282                      -                   (256,282)                      -
Intangible assets, net                                  -                 18,227                          -                  18,227
Goodwill                                                -                125,399                      2,598                 127,997
Other long-term assets                                723                 62,036                          -                  62,759
Total assets                                   $  374,754          $   2,469,088          $        (341,372)         $    2,502,470
     LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt           $   47,974          $      10,842          $               -          $       58,816
Obligations under inventory financing
agreements                                              -                592,621                          -                 592,621
Accounts payable                                    1,553                133,536                      1,478                 136,567

Deferred revenue                                        -                  6,980                          -                   6,980
Accrued taxes                                          61                 29,749                          -                  29,810
Operating lease liabilities                           703                 57,186                          -                  57,889
Other accrued liabilities                           8,121                301,832                     (1,962)                307,991
Due to related parties                             35,615                 20,514                    (56,129)                      -
Total current liabilities                          94,027              1,153,260                    (56,613)              1,190,674
Long-term liabilities
Long-term debt, net of current maturities               -                597,185                          -                 597,185

Finance lease liabilities                              43                 11,901                     (4,594)                  7,350
Operating lease liabilities                         4,573                370,811                          -                 375,384
Other liabilities                                      44                 66,032                    (10,266)                 55,810
Total liabilities                                  98,687              2,199,189                    (71,473)              2,226,403
Commitments and contingencies
Stockholders' equity
Preferred stock                                         -                      -                          -                       -
Common stock                                          601                      -                          -                     601
Additional paid-in capital                        814,467                449,694                   (449,694)                814,467
Accumulated earnings (deficit)                   (539,255)              (180,879)                   180,879                (539,255)
Accumulated other comprehensive income (loss)         254                  1,084                     (1,084)                    254
Total stockholders' equity                        276,067                269,899                   (269,899)                276,067

Total liabilities and stockholders' equity $ 374,754 $ 2,469,088 $ (341,372) $ 2,502,470





                                       40
--------------------------------------------------------------------------------

                                                                               As of December 31, 2020
                                                                                             Non-Guarantor              Par Pacific
                                                  Parent              Issuer and            Subsidiaries and          Holdings, Inc.
                                                 Guarantor           Subsidiaries             Eliminations           and Subsidiaries
                    ASSETS
Current assets
Cash and cash equivalents                      $      480          $      67,147          $             682          $       68,309
Restricted cash                                       330                  1,670                          -                   2,000
Trade accounts receivable                               -                111,654                          3                 111,657
Inventories                                             -                429,855                          -                 429,855
Prepaid and other current assets                   16,983                  7,171                        494                  24,648
Due from related parties                          107,995                      -                   (107,995)                      -
Total current assets                              125,788                617,497                   (106,816)                636,469

Property, plant, and equipment


Property, plant, and equipment                     21,477              1,124,587                     37,814               1,183,878
Less accumulated depreciation, depletion, and
amortization                                      (14,368)              (233,927)                    (2,818)               (251,113)
Property, plant, and equipment, net                 7,109                890,660                     34,996                 932,765
Long-term assets
Operating lease right-of-use assets                 3,714                367,850                    (14,398)                357,166
Investment in Laramie Energy, LLC                       -                      -                          -                       -
Investment in subsidiaries                        209,010                      -                   (209,010)                      -
Intangible assets, net                                  -                 18,892                          -                  18,892
Goodwill                                                -                125,399                      2,598                 127,997
Other long-term assets                                723                 59,849                          -                  60,572
Total assets                                   $  346,344          $   2,080,147          $        (292,630)         $    2,133,861
     LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt           $   47,301          $      11,048          $           1,584          $       59,933
Obligations under inventory financing
agreements                                              -                423,686                          -                 423,686
Accounts payable                                    2,401                103,067                      1,477                 106,945

Deferred revenue                                        -                  4,083                          -                   4,083
Accrued taxes                                          49                 27,371                         20                  27,440
Operating lease liabilities                           750                 60,449                     (4,234)                 56,965
Other accrued liabilities                          10,907                190,031                     (1,310)                199,628
Due to related parties                             33,757                 36,124                    (69,881)                      -
Total current liabilities                          95,165                855,859                    (72,344)                878,680
Long-term liabilities
Long-term debt, net of current maturities               -                608,353                     40,307                 648,660
Common stock warrants                                   -                      -                          -                       -

Finance lease liabilities                              77                  7,848                          -                   7,925
Operating lease liabilities                         4,783               
309,736                    (10,164)                304,355
Other liabilities                                      45                 87,382                    (39,460)                 47,967
Total liabilities                                 100,070              1,869,178                    (81,661)              1,887,587
Commitments and contingencies
Stockholders' equity
Preferred stock                                         -                      -                          -                       -
Common stock                                          540                      -                          -                     540
Additional paid-in capital                        726,504                307,967                   (307,967)                726,504
Accumulated earnings (deficit)                   (477,028)               (94,086)                    94,086                (477,028)
Accumulated other comprehensive income (loss)      (3,742)                (2,912)                     2,912                  (3,742)
Total stockholders' equity                        246,274                210,969                   (210,969)                246,274

Total liabilities and stockholders' equity $ 346,344 $ 2,080,147 $ (292,630) $ 2,133,861




                                       41
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Three Months Ended March 31, 2021

                                                                                            Non-Guarantor               Par Pacific
                                               Parent              Issuer and             Subsidiaries and          Holdings, Inc. and
                                              Guarantor           Subsidiaries              Eliminations               Subsidiaries
Revenues                                    $        -          $      888,680          $                -          $        888,680

Operating expenses
Cost of revenues (excluding depreciation)            -                 888,863                           -                   888,863
Operating expense (excluding depreciation)           -                  74,905                        (717)                   74,188
Depreciation, depletion, and amortization          666                  22,119                          95                    22,880
Impairment expense                                   -                       -                           -                         -
Gain on sale of assets, net                          -                 (11,208)                    (53,704)                  (64,912)
General and administrative expense
(excluding depreciation)                         3,105                   8,780                           -                    11,885
Acquisition and integration costs                  438                       -                           -                       438
Total operating expenses                         4,209                 983,459                     (54,326)                  933,342

Operating income (loss)                         (4,209)                (94,779)                     54,326                   (44,662)

Other income (expense)
Interest expense and financing costs, net       (1,290)                (16,897)                         36                   (18,151)

Debt extinguishment and commitment costs             -                     (91)                     (1,416)                   (1,507)
Gain on curtailment of pension obligation            -                   2,032                           -                     2,032
Other income, net                                   (7)                     69                          (1)                       61

Equity earnings (losses) from subsidiaries     (56,721)                      -                      56,721                         -

Total other income (expense), net              (58,018)                (14,887)                     55,340                   (17,565)

Income (loss) before income taxes              (62,227)               (109,666)                    109,666                   (62,227)
Income tax benefit (expense) (1)                     -                  22,873                     (22,873)                        -
Net income (loss)                           $  (62,227)         $      (86,793)         $           86,793          $        (62,227)

Adjusted EBITDA                             $   (3,112)         $      (40,930)         $              716          $        (43,326)

________________________________________________________

(1)  The income tax benefit (expense) of the Parent Guarantor and Issuer and
Subsidiaries is determined using the separate return method. The Non-Guarantor
Subsidiaries and Eliminations column includes tax benefits recognized at the Par
consolidated level that are primarily associated with changes to the
consolidated valuation allowance and other deferred tax balances.
                                       42
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Three Months Ended March 31, 2020

                                                                                           Non-Guarantor              Par Pacific
                                                Parent              Issuer and            Subsidiaries and          Holdings, Inc.
                                              Guarantor            Subsidiaries             Eliminations           and Subsidiaries
Revenues                                    $         -          $   1,204,081          $               2          $    1,204,083

Operating expenses
Cost of revenues (excluding depreciation)             -              1,210,211                          -               1,210,211
Operating expense (excluding depreciation)            -                 74,574                     (1,183)                 73,391
Depreciation, depletion, and amortization           736                 20,417                        130                  21,283
Impairment expense                                    -                 67,922                          -                  67,922
Gain on sale of assets, net                           -                      -                          -                       -
General and administrative expense
(excluding depreciation)                          3,001                  8,783                          -                  11,784
Acquisition and integration costs                     -                    665                          -                     665
Total operating expenses                          3,737              1,382,572                     (1,053)              1,385,256

Operating loss                                   (3,737)              (178,491)                     1,055                (181,173)

Other income (expense)
Interest expense and financing costs, net        (1,228)               (15,030)                    (2,416)                (18,674)

Other income, net                                    10                     14                          -                      24
Change in value of common stock warrants          4,270                      -                          -                   4,270

Equity earnings (losses) from subsidiaries     (221,652)                     -                    221,652                       -
Equity losses from Laramie Energy, LLC                -                      -                    (45,031)                (45,031)
Total other income (expense), net              (218,600)               (15,016)                   174,205                 (59,411)

Income (loss) before income taxes              (222,337)              (193,507)                   175,260                (240,584)
Income tax benefit (expense) (1)                      -                 31,495                    (13,248)                 18,247
Net income (loss)                           $  (222,337)         $    (162,012)         $         162,012          $     (222,337)

Adjusted EBITDA                             $    (2,930)         $      15,417          $           1,185          $       13,672

________________________________________________________

(1)  The income tax benefit (expense) of the Parent Guarantor and Issuer and
Subsidiaries is determined using the separate return method. The Non-Guarantor
Subsidiaries and Eliminations column includes tax benefits recognized at the Par
consolidated level that are primarily associated with changes to the
consolidated valuation allowance and other deferred tax balances.
                                       43
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Non-GAAP Financial Measures

  Adjusted EBITDA for the supplemental consolidating condensed financial
information, which is segregated at the "Parent Guarantor," "Issuer and
Subsidiaries," and "Non-Guarantor Subsidiaries and Eliminations" levels, is
calculated in the same manner as for the Par Pacific Holdings, Inc. Adjusted
EBITDA calculations. See "Results of Operations - Non-GAAP Performance Measures
- Adjusted Net Income (Loss) and Adjusted EBITDA" above.
  The following tables present a reconciliation of Adjusted EBITDA to the most
directly comparable GAAP financial measure, Net Loss, on a historical basis for
the periods indicated (in thousands):
                                                                           

Three Months Ended March 31, 2021

                                                                                              Non-Guarantor               Par Pacific
                                                 Parent              Issuer and             Subsidiaries and          Holdings, Inc. and
                                                Guarantor           Subsidiaries              Eliminations               Subsidiaries
Net income (loss)                             $  (62,227)         $      (86,793)         $           86,793          $        (62,227)
Inventory valuation adjustment                         -                  14,175                           -                    14,175
LIFO liquidation adjustment                            -                   1,888                           -                     1,888
RINs loss (gain) in excess of net obligation           -                  28,770                           -                    28,770
Unrealized loss (gain) on derivatives                  -                  (4,012)                          -                    (4,012)
Acquisition and integration costs                    438                       -                           -                       438
Debt extinguishment and commitment costs               -                      91                       1,416                     1,507

Severance costs                                        -                      16                           -                        16
Gain on sale of assets, net                            -                 (11,208)                    (53,704)                  (64,912)

Depreciation, depletion, and amortization            666                  22,119                          95                    22,880
Interest expense and financing costs, net          1,290                  16,897                         (36)                   18,151

Equity losses (income) from subsidiaries          56,721                       -                     (56,721)                        -
Income tax expense (benefit)                           -                 (22,873)                     22,873                         -
Adjusted EBITDA (3)                           $   (3,112)         $      (40,930)         $              716          $        (43,326)


                                       44
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                                                                               Three Months Ended March 31, 2020
                                                                                                  Non-Guarantor               Par Pacific
                                                      Parent              Issuer and             Subsidiaries and         Holdings, Inc. and
                                                    Guarantor            Subsidiaries              Eliminations              Subsidiaries
Net income (loss)                                 $  (222,337)         $   

(162,012) $ 162,012 $ (222,337) Inventory valuation adjustment

                              -                  75,324                          -                    75,324

RINs loss (gain) in excess of net obligation                -                   6,602                          -                     6,602
Unrealized loss on derivatives                              -                  22,876                          -                    22,876
Acquisition and integration costs                           -                     665                          -                       665

Changes in valuation allowance and other deferred
tax items (1)                                               -                       -                    (18,373)                  (18,373)
Change in value of common stock warrants               (4,270)                      -                          -                    (4,270)

Severance costs                                            61                      88                          -                       149

Impairment of Investment in Laramie Energy, LLC
(2)                                                         -                       -                     45,294                    45,294
Par's share of Laramie Energy's unrealized gain
on derivatives (2)                                          -                       -                     (1,110)                   (1,110)
Impairment expense                                          -                  67,922                          -                    67,922
Depreciation, depletion, and amortization                 736                  20,417                        130                    21,283
Interest expense and financing costs, net               1,228                  15,030                      2,416                    18,674
Equity losses from Laramie Energy, LLC, excluding
Par's share of unrealized gain on derivatives and
impairment losses                                           -                       -                        847                       847
Equity losses (income) from subsidiaries              221,652                       -                   (221,652)                        -
Income tax expense (benefit)                                -                 (31,495)                    31,621                       126
Adjusted EBITDA (3)                               $    (2,930)         $       15,417          $           1,185          $         13,672

________________________________________________________

(1)Includes increases in (releases of) our valuation allowance associated with
business combinations and changes in deferred tax assets and liabilities that
are not offset by a change in the valuation allowance. These tax expenses
(benefits) are included in Income tax expense (benefit) on our condensed
consolidated statements of operations.
(2)Includes impairment losses on our investment in Laramie Energy and our share
of Laramie Energy's asset impairment losses in excess of our basis difference.
These impairment losses and our share of Laramie Energy's unrealized loss (gain)
on derivatives are included in Equity earnings (losses) from Laramie Energy, LLC
on our condensed consolidated statements of operations.
(3)For the three months ended March 31, 2021, there was no change in valuation
allowance and other deferred tax items, change in value of common stock
warrants, impairment of investment in Laramie Energy, unrealized gain on
derivatives included in equity earnings from Laramie Energy, impairment expense,
or equity losses from Laramie Energy. For the three months ended March 31, 2020,
there was no LIFO liquidation adjustment or loss (gain) on sale of assets.
Liquidity and Capital Resources
  Our liquidity and capital requirements are primarily a function of our debt
maturities and debt service requirements and contractual obligations, capital
expenditures, turnaround outlays, and working capital needs. Examples of working
capital needs include purchases and sales of commodities and associated margin
and collateral requirements, facility maintenance costs, and other costs such as
payroll. Our primary sources of liquidity are cash flows from operations, cash
on hand, amounts available under our credit agreements, and access to capital
markets.
  Our liquidity position as of March 31, 2021 was $286.9 million and consisted
of $282.1 million at Par Petroleum, LLC and subsidiaries, $3.5 million at Par
Pacific Holdings, and $1.3 million at all our other subsidiaries.
As of March 31, 2021, we had access to the J. Aron Deferred Payment Arrangement,
the ABL Credit Facility, the MLC receivable advances, and cash on hand of $214.7
million. In addition, we have the Supply and Offtake Agreements with J. Aron and
the Washington Refinery Intermediation Agreement, which are used to finance the
majority of the inventory at our Hawaii and Washington refineries, respectively.
Generally, the primary uses of our capital resources have been in the operations
of our refining and retail segments, payments related to acquisitions, and to
repay or refinance indebtedness.
                                       45
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In the first quarter of 2021, we closed on the sale and leaseback of twenty-two
(22) of our retail properties in Hawaii for an aggregate cash purchase price of
approximately $112.8 million net of transaction fees (the "Sale-Leaseback
Transaction"). We used approximately $53.1 million of the net cash proceeds to
repay the certain financing arrangements which were related to certain of the
retail properties and the remainder for general corporate purposes.
On March 19, 2021, we sold 5.75 million shares of common stock in an
underwritten public offering at a public offering price of $16.00 per share,
resulting in net proceeds of approximately $87.4 million, after deducting
underwriting discounts and commissions and offering expenses. We intend to use
the net proceeds from the Equity Offering for general corporate purposes,
including repaying indebtedness, capital expenditures, and funding working
capital.
We believe our cash flows from operations and available capital resources will
be sufficient to meet our current capital and turnaround expenditures, working
capital, and debt service requirements for the next 12 months. We may seek to
raise additional debt or equity capital to fund any other significant changes to
our business or to refinance existing debt. We cannot offer any assurances that
such capital will be available in sufficient amounts or at an acceptable cost.
We may from time to time seek to retire or repurchase our 5.00% Convertible
Senior Notes, our 7.75% Senior Secured Notes, our 12.875% Senior Secured Notes,
or our common stock through cash purchases and/or exchanges for equity
securities, in open market purchases, privately negotiated transactions, or
otherwise. Such repurchases or exchanges, if any, will depend on prevailing
market conditions, our liquidity requirements, contractual restrictions, and
other factors. The amounts involved may be material.
Cash Flows

The following table summarizes cash activities for the three months ended March 31, 2021 and 2020 (in thousands):

                                                                    Three 

Months Ended March 31,

                                                                    2021                     2020

Net cash provided by (used in) operating activities $ (30,737) $ 14,499 Net cash provided by (used in) investing activities

                    94,678                (14,943)
Net cash provided by (used in) financing activities                    82,483                (63,491)


  Net cash used in operating activities was approximately $30.7 million for the
three months ended March 31, 2021, which resulted from a net loss of
approximately $62.2 million, offset by net cash provided by changes in operating
assets and liabilities of approximately $85.8 million and non-cash earnings from
operations of approximately $54.3 million. The change in our operating assets
and liabilities for the three months ended March 31, 2021 was primarily due to a
net increase in our Supply and Offtake Agreements and Washington Refinery
Intermediation Agreement obligations of $124.4 million and an increase in our
gross environmental credit obligations of $109.5 million, partially offset by
increases in inventories of $139.1 million and accounts receivable of $45.0
million. Net cash provided by changes in operating assets and liabilities also
includes an increase of $5.6 million in deferred turnaround costs. Net cash
provided by operating activities was approximately $14.5 million for the three
months ended March 31, 2020, which resulted from a net loss of approximately
$222.3 million and net cash used for changes in operating assets and liabilities
of approximately $88.7 million, offset by non-cash charges to operations of
approximately $325.6 million.
  For the three months ended March 31, 2021, net cash provided by investing
activities was approximately $94.7 million and primarily related to proceeds
received from the Sale-Leaseback Transaction. Net cash used in investing
activities was approximately $14.9 million for the three months ended March 31,
2020 and primarily related to additions to property and equipment totaling
approximately $14.9 million.
  Net cash provided by financing activities for the three months ended March 31,
2021 was approximately $82.5 million, which consisted primarily of proceeds of
$87.4 million from our March 2021 Equity Offering and net borrowings associated
with the J. Aron deferred payment and MLC receivable advances of approximately
$44.5 million, partially offset by net debt and insurance premium repayments of
approximately $47.3 million. Net cash used in financing activities for the three
months ended March 31, 2020 was approximately $63.5 million, which consisted
primarily of net debt and insurance premium repayments of approximately $9.8
million and net repayments associated with the J. Aron deferred payment and MLC
receivable advances of approximately $52.1 million.
                                       46
--------------------------------------------------------------------------------

Capital Expenditures and Turnaround Costs

  Our deferred turnaround costs and capital expenditures, excluding
acquisitions, for the three months ended March 31, 2021 totaled approximately
$13.8 million and were primarily related to the 2021 turnaround and related
scheduled maintenance work at our Washington refinery and underground tank
replacements, rebranding, and point of sale and other equipment upgrades at our
Retail segment. Our capital expenditure and deferred turnaround cost budget for
2021 ranges from $35 to $45 million and primarily relates to a partial
turnaround at our Washington refinery and scheduled sustaining maintenance,
regulatory, and safety compliance projects across all businesses.

We also continue to seek strategic investments in business opportunities, but the amount and timing of those investments are not predictable. Commitments and Contingencies

  Supply and Offtake Agreements. On June 1, 2015, we entered into the Supply and
Offtake Agreements with J. Aron to support our Hawaii refining operations. On
May 8, 2017, we and J. Aron amended the Supply and Offtake Agreements and
extended the term through May 31, 2021 with a one-year extension option upon
mutual agreement of the parties. On June 27, 2018, we and J. Aron amended the
Supply and Offtake Agreements to increase the amount that we may defer under the
deferred payment arrangement. On December 5, 2018, we and J. Aron amended the
Supply and Offtake Agreements to account for additional processing capacity
expected to be provided by the Par West Hawaii refinery. On May 4, 2021, we
extended the term of the Supply and Offtake Agreements to June 30, 2021. We
expect to finalize a new multi-year agreement during the second quarter. Please
read Note 7-Inventory Financing Agreements for more information.
  Washington Refinery Intermediation Agreement. In connection with the
consummation of the Washington Acquisition on January 11, 2019, we assumed the
Washington Refinery Intermediation Agreement with MLC to support the operations
of our Washington refinery. On November 1, 2019, we and MLC amended the
Washington Refinery Intermediation Agreement and extended the term through
June 30, 2021, We further amended the Washington Refinery Intermediation
Agreement on February 11, 2021 and extended the term through March 31, 2022.
Please read Note 7-Inventory Financing Agreements for more information.
  From time to time, we may be involved in litigation relating to claims arising
out of our operations in the normal course of our business. Please read Note
13-Commitments and Contingencies to our condensed consolidated financial
statements for more information.
Critical Accounting Policies and Estimates
  There have been no material changes to critical accounting policies disclosed
in our Annual Report on Form 10-K.
Forward-Looking Statements
  Certain statements in this Quarterly Report on Form 10-Q may constitute
"forward-looking" statements as defined in Section 27A of the Securities Act of
1933, as amended (the "Securities Act"), Section 21E of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), the Private Securities Litigation
Reform Act of 1995 ("PSLRA"), or in releases made by the SEC, all as may be
amended from time to time. Such forward-looking statements involve known and
unknown risks, uncertainties, and other important factors including, without
limitation, our expectations regarding the impact of COVID-19 on our business,
our customers, and the markets where we operate; our beliefs with regard to
available capital resources, our beliefs regarding the likelihood or impact of
any potential fines or penalties and of the fair value of certain assets, and
our expectations with respect to laws and regulations, including environmental
regulations and related compliance costs and any fines or penalties related
thereto; our expectations regarding the sufficiency of our cash flows and
liquidity; our expectations regarding anticipated capital expenditures,
including the timing and cost of compliance with consent decrees and other
enforcement actions; our expectations regarding the impact of the adoption of
certain accounting standards; our estimates regarding the fair value of certain
indebtedness; estimated costs to settle claims from the Delta bankruptcy; the
estimated value of, and our ability to settle, legal claims remaining to be
settled against third parties; our expectations regarding the synergies or other
benefits of our acquisitions; our expectations regarding certain tax liabilities
and debt obligations; our expectations and estimates regarding our Supply and
Offtake Agreements and the Washington Refinery Intermediation Agreement;
management's assumptions about future events; our ability to raise additional
debt or equity capital; our ability to make strategic investments in business
opportunities; and the estimates, assumptions, and projections regarding future
financial condition, results of operations, liquidity, and cash flows. These and
other forward-looking statements could cause the actual results, performance, or
achievements of Par and its subsidiaries to differ materially from any future
results, performance, or achievements expressed or implied by such
forward-looking statements. Statements that are not historical fact are forward-
                                       47

--------------------------------------------------------------------------------


looking statements. Forward-looking statements can be identified by, among other
things, the use of forward-looking language, such as the words "plan,"
"believe," "expect," "anticipate," "intend," "estimate," "project," "may,"
"will," "would," "could," "should," "seeks," or "scheduled to," or other similar
words, or the negative of these terms or other variations of these terms or
comparable language, or by discussion of strategy or intentions. These
cautionary statements are being made pursuant to the Securities Act, the
Exchange Act, and the PSLRA with the intention of obtaining the benefits of the
"safe harbor" provisions of such laws.
  The forward-looking statements contained in this Quarterly Report on Form 10-Q
are largely based on our expectations, which reflect estimates and assumptions
made by our management. These estimates and assumptions reflect our best
judgment based on currently known market conditions and other factors. Although
we believe such estimates and assumptions to be reasonable, they are inherently
uncertain and involve a number of risks and uncertainties that are beyond our
control, including those set out in our most recent Annual Report on Form 10-K
and this Quarterly Report on Form 10-Q under "Risk Factors."
  In addition, management's assumptions about future events may prove to be
inaccurate. All readers are cautioned that the forward-looking statements
contained in this Quarterly Report on Form 10-Q are not guarantees of future
performance; and we cannot assure any reader that such statements will be
realized or that the forward-looking events and circumstances will occur. Actual
results may differ materially from those anticipated or implied in the
forward-looking statements due to factors described above and under Critical
Accounting Policies and Risk Factors included in our most recent Annual Report
on Form 10-K and in this Quarterly Report on Form 10-Q. All forward-looking
statements speak only as of the date they are made. Additionally, significant
uncertainties remain with respect to COVID-19 and its economic effects. Due to
the unpredictable and unprecedented nature of the COVID-19 pandemic, we cannot
identify all potential risks to, and impacts on, our business, including the
ultimate adverse economic impact to the Company's business, results of
operations, financial condition, and liquidity. However, the adverse impact of
COVID-19 on the Company has been and will likely continue to be material. There
can be no guarantee that the operational and financial measures the Company has
taken, and may take in the future, will be fully effective. We do not intend to
update or revise any forward-looking statements as a result of new information,
future events, or otherwise. These cautionary statements qualify all
forward-looking statements attributable to us or persons acting on our behalf.

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