Par Pacific(PARR) - 2021 Q3 - Quarterly Report

Financial Performance - For the three months ended September 30, 2021, net income improved to $81.8 million from a net loss of $14.3 million for the same period in 2020, driven by higher product crack spreads and a 16% increase in sales volumes in the Refining segment [180]. - Adjusted EBITDA for the third quarter of 2021 was $84.7 million, compared to a loss of $16.1 million in the third quarter of 2020, primarily due to improved crack spreads and favorable RINs mark-to-market adjustments [181]. - For the nine months ended September 30, 2021, net loss decreased to $89.4 million from a net loss of $277.2 million for the same period in 2020, aided by favorable feedstock costs and a gain of $63.9 million from Sale-Leaseback Transactions [183]. - Revenues for the third quarter of 2021 were $1.31 billion, a 90% increase from $689.98 million in the third quarter of 2020 [187]. - The company reported revenues of $3.42 billion for the nine months ended September 30, 2021, representing a 42% increase from $2.41 billion in the same period in 2020 [189]. - Operating income for the three months ended September 30, 2021, was $97,793 million, compared to an operating income of $2,750 million for the same period in 2020, indicating a substantial recovery [192]. - For the nine months ended September 30, 2021, revenues were $3.4 billion, a $1.0 billion increase compared to $2.4 billion for the same period in 2020, primarily driven by a $0.9 billion increase in third-party revenues at the refining segment [230]. Refining Segment Performance - The refining margins improved during the third quarter of 2021 compared to the second quarter, with profitability in retail and logistics segments reaching over 90% of pre-pandemic levels [174]. - Feedstocks throughput for the refining segment increased to 137.3 Mbpd in Q3 2021 from 105.0 Mbpd in Q3 2020, reflecting a growth of approximately 30.5% [195]. - Refined product sales volume rose to 144.9 Mbpd in Q3 2021, up from 125.0 Mbpd in Q3 2020, marking an increase of about 15.9% [195]. - Adjusted gross margin per barrel for the refining segment improved to $7.66 in Q3 2021, compared to a negative margin of $(0.47) in Q3 2020 [195]. - The total yield for the refining segment improved to 97.5% in Q3 2021, compared to 94.4% in Q3 2020 [195]. - Adjusted Gross Margin for the refining segment was $120.0 million for the three months ended September 30, 2021, an increase of $103.7 million compared to $16.3 million in the same period of 2020 [216]. - The company reported an operating income of $86,413 thousand for the refining segment in Q3 2021, a significant recovery from an operating loss of $5,106 thousand in Q3 2020 [203]. Liquidity and Capital Management - The company undertook liquidity-enhancing measures, including a sale-leaseback transaction for $112.8 million and a public offering of 5.75 million shares resulting in net proceeds of approximately $87.2 million [176][177]. - As of September 30, 2021, liquidity position was $276.8 million, consisting of $272.2 million at Par Petroleum, LLC and subsidiaries [259]. - The company raised approximately $87.2 million from a public offering of 5.75 million shares at $16.00 per share in March 2021 [262]. - The company has access to various credit facilities totaling $201.3 million as of September 30, 2021 [260]. Cost and Expense Management - Cost of revenues (excluding depreciation) for the three months ended September 30, 2021, was $1.1 billion, an increase of $500 million compared to $600 million in the same period of 2020, primarily due to higher crude oil prices [223]. - Operating expense (excluding depreciation) increased to $221.1 million for the nine months ended September 30, 2021, up $11.2 million from $209.9 million in the same period of 2020, driven by higher utility and maintenance expenses [232]. - Production costs per barrel decreased to $4.28 in Q3 2021 from $5.80 in Q3 2020, indicating improved cost efficiency [195]. Market Conditions and Risks - The average Brent crude oil price increased to $73.23 per barrel in Q3 2021 from $43.34 per barrel in Q3 2020, a rise of 68.9% [196]. - A $1 change in the price of crude oil would result in a change of approximately $1.2 million to the fair value of the company's derivative instruments and cost of revenues [280]. - The company monitors the creditworthiness of customers to mitigate credit risk and establish credit limits according to its credit policy [285].