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YoY shift: Neutral
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is 0.03pp more bullish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
+0.06pp
Flat
Net-tone change vs last year's 10-K.
MD&A
-0.00pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
adversely+5
adverse+3
volatility+3
unable+1
failure+1
Positive rising
effective+1
able+1
successfully+1
Risk Factors (Item 1A)
11,834 words
Item 1A. RISK FACTORS
Our businesses involve a high degree of risk. You should consider and read carefully the risks and uncertainties described below together with all of the other information contained in this Annual Report on Form 10-K. If any of the following risks, or any risk described elsewhere in this Annual Report on Form 10-K, actually occur, our business, prospects, financial condition, results of operations, or cash flows could be materially adversely affected. In any such case, the trading price of our common stock could decline. The risks described below are not the only ones facing our company. Additional risks not currently known to us or that we currently deem immaterial may also adversely affect us. These disclosures reflect the Company’s beliefs and opinions as to factors that could materially and adversely affect the Company and its securities in the future. Any references to past events are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past or their likelihood of occurring in the future.
OPERATING RISKS
Our operations are subject to operational hazards that could us to potentially significant .
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
loss+13
depletion+7
losses+6
incident+6
unfavorable+4
Positive rising
improved+7
gain+6
benefit+5
gains+2
effective+2
MD&A (Item 7)
19,598 words
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
We are a growing energy company based in Houston, Texas, that provides both renewable and conventional fuels to the western United States. For more information, please read “Part I –Item 1. — Business—Overview” of this Form 10-K.
Known Trends or Uncertainties
While the market indices presented below under “Item 7. — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations” are representative of the results of our refineries, each refinery’s realized gross margin on a per barrel basis will differ from the benchmark due to a variety of factors that affect the performance of the specific refinery. These factors include, but are not limited to, the actual type and timing of crude oil throughput; product yields; transportation and storage costs; fuel burn; product premiums or discounts; inventory fluctuations; feedstock and product purchases; commodity price risk-management activities; crude oil purchase financing activities; and other factors not reflected in the benchmark refining margin. We operate in logistically complex, niche markets and, as such, each of our refineries has unique cost advantages and disadvantages as compared to their respective relevant market indices.
Recent Events Affecting Comparability of Periods
Operational Update. Our Wyoming refinery experienced an operational on the evening of February 12, 2025, and remained safely during repair and recovery work through April 2025, when the refinery returned to full crude operations. The 66 days of time impacted comparability between the year ended December 31, 2025, and December 31, 2024.
Our operations are subject to potential operational hazards and risks inherent in refining operations, in transporting and storing crude oil and refined products, and in producing natural gas and oil. Any of these risks, such as fires, explosions, maritime disasters, security breaches, cyber threats, pipeline ruptures and spills, mechanical failure of equipment, and severe weather and natural disasters at our or third-party facilities could result in business interruptions or shutdowns and damage to our properties and the properties of others. The scientific consensus suggests that some of these physical risks to our facilities and third-party facilities, especially risks associated with extreme weather, may increase as a result of climate change. A seriousaccident at our facilities could also result in seriousinjury or death to our employees or contractors and could expose us to significant liability for personal injuryclaims and reputational risk. Any such event or unplannedshutdown could have a material adverse effect on our business, financial condition, and results of operations.
The volatility of crude oil prices and refined product prices and changes in the demand for such products may have a material adverse effect on our cash flow and results of operations.
Earnings and cash flows from our refining segment depend on a number of factors, including to a large extent the cost of crude oil and other refinery feedstocks which has fluctuated significantly in recent years. While prices for refined products are influenced by the price of crude oil, the constantly changing margin between the price we pay for crude oil and other refinery feedstocks and the prices we receive for refined products, the crack spread, also fluctuates significantly. The prices we pay and prices we receive depend on numerous factors beyond our control, including the global supply and demand for crude oil and renewable feedstocks, as well as gasoline and other conventional and renewable refined products, which are subject to, among other things:
• changes in the global economy and the level of foreign and domestic production of crude oil and refined products;
• availability of conventional and renewable feedstocks and refined products and the infrastructure to transport them;
• local factors, including market conditions, the level of operations of other refineries in our markets, and the volume and price of refined products imported;
• threatened or actual terrorist incidents (including cyber attacks), acts of war, and other global political conditions;
• changes in U.S. trade policy and the impact of tariffs;
• changes in the availability or cost of maritime shipping;
• pandemics, public health crises, or other widespread emergencies such as COVID-19;
• government regulations or mandated production curtailments or limitations;
• changes in the price or availability of certain environmental compliance credits; and
• weather conditions, hurricanes, or other natural disasters.
These actions could result in an increase in the price we pay for crude oil and renewable feedstocks, which may result in a decrease in the expected earnings and cash flows generated by our refining business. Periods of elevated renewable feedstock costs combined with declining renewable product or environmental credit prices may materially compress renewable margins and adversely affect our renewable operations.
In addition, we purchase our refinery feedstocks before manufacturing and selling the refined products. Price level changes during the periods between purchasing and selling these refined products could also have a material adverse effect on our business, financial condition, and results of operations. We similarly procure renewable feedstocks prior to processing and sale of renewable fuels, and fluctuations in environmental credit prices during these periods may increase earnings volatility.
Instability in the global economic and political environment can lead to volatility in the cost and availability of crude oil and prices for refined products, which could adversely impact our results of operations.
Instability in the global economic and political environment can lead to volatility in the cost and availability of crude oil and in the price and demand for refined products. This may place downward pressure on our results of operations. This is particularly true of developments in and relating to oil-producing countries, including terrorist activities, military conflicts, embargoes, internal instability, or actions or reactions of the U.S. or foreign governments in anticipation of, or in response to, such developments. Any such events may limit or disrupt markets, which could negatively impact our ability to access global crude oil commodity flows or sell our refined products.
Geopolitical conflicts, including the Russia-Ukraine war, could increase the cost of our crude oil feedstocks and affect the demand for our products.
In February 2022, following Russia’s invasion of Ukraine, the U.S. and other countries announced sanctions against Russia, including restrictions on the importation of Russian crude oil. On March 3, 2022, we suspended purchases of Russian crude oil for our Hawaii refinery in response to the Russia-Ukraine conflict. The U.S. and other countries have imposed additional sanctions as the conflict has escalated. Any further sanctions imposed or actions taken by the U.S. or other countries, and any retaliatory measures by Russia in response, such as restrictions on energy supplies from Russia, may increase our costs, reduce our sales and earnings, or otherwise have an adverse effect on our operations. Additionally, geopolitical conflicts like the Russia-Ukraine war, the Israel-Palestine conflict, the political activity in Venezuela, Houthi-related disruptions in the Red Sea, and tensions involving Iran and the Strait of Hormuz may exacerbate inflationary pressures, including with respect to commodity prices and energy costs, and disrupt global supply chains. Rapid and significant changes in commodity costs may increase the cost of our crude oil feedstocks and affect the demand for our products.
Changes in U.S. trade policy and the impact of tariffs may have a material adverse effect on our business, results of operations, and financial condition.
Our business may be adversely affected by uncertainty and changes in U.S. trade policies. For example, effective August 1, 2025, the U.S. adopted new and increased tariffs on countries and specific goods, subject to evolving exemptions. In October 2025, the U.S. government announced a series of new and expanded tariffs on imports from China and other countries, including a 100% tariff on certain categories of goods and increased duties. On November 1, 2025, the U.S. government announced a deal with China that retained heightened reciprocal tariffs and suspended (retaining a 10% baseline) and reduced certain China-specific tariffs, effective November 10, 2025. Separately, previously announced tariffs on imports from other countries went into effect on November 1, 2025. Our business requires access to crude oil and other feedstocks to refine conventional and renewable fuels. Any imposition of, or increase in, tariffs on imports of feedstocks or other materials could increase our production costs and the cost to maintain our assets. To the extent we are unable to pass these cost increases on to our customers, such cost increases could adversely affect our business, results of operations, and financial condition. Tariffs or other trade restrictions may also lead to continuing uncertainty and volatility in U.S. and global financial and economic conditions and commodity markets, increased inflation, diminished economic expectations, and reduced demand for our products. While the impact of these factors is difficult to predict, any one or more of these factors could have a material adverse impact on our business, results of operations, and financial condition.
Many of our refined products could cause seriousinjury or death if mishandled or misused by us or our purchasers, or if defects occur during manufacturing.
While we produce, store, transport, and deliver all of our refined products in a safe manner, many of our refined products are highly flammable or explosive and could cause significant damage to persons or property if mishandled. Defects in our products (such as gasoline or jet fuel) or misuse by us or by end purchasers could lead to fatalities or seriousdamage to property. We may be held liable for such occurrences, which could have a material adverse effect on our business and results of operations.
Our business is impacted by increased risks of spills, discharges, or other releases of petroleum or hazardous substances in our refining and logistics operations.
The operation of refineries, pipelines, and refined products terminals is subject to increased risks of spills, discharges, or other inadvertent releases of petroleum or hazardous substances, and we operate in and around environmentally sensitive coastal waters that are closely regulated and monitored. These events could occur in connection with the operation of our refineries, pipelines, or refined products terminals. If any of these events occur, or is found to have previously occurred, we could be liable for costs and penalties associated with their remediation under federal, state, and local environmental laws or common law, and could be liable for property damage to third parties caused by contamination from releases and spills. The
penalties and clean-up costs that we may have to pay for releases or the amounts that we may have to pay to third parties for damages to their property could be significant and have a material adverse effect on our business, financial condition, or results of operations.
Our operations, including the operation of underground storage tanks, are also subject to the risk of environmental litigation and investigations which could affect our results of operations.
From time to time, we may be subject to litigation or investigations with respect to environmental and related matters, the costs of which could be material. We operate fueling stations with underground storage tanks used primarily for storing and dispensing refined fuels. In addition, some fueling stations where we sell fuel are owned or operated by third parties who are not under our control. Federal and state regulations and legislation govern the storage tanks and compliance with these requirements can be costly. The operation of underground storage tanks poses certain risks, including leaks. Leaks from underground storage tanks, which may occur at one or more of our fueling stations, may impact soil or groundwater and could result in fines or civil liability for us.
Our insurance coverage may be inadequate to protect us from the liabilities that could arise in our business.
We carry property, casualty, business interruption, and other lines of insurance, but we do not maintain insurance coverage against all potential losses. Marine vessel charter agreements do not include indemnity provisions for oil spills, so we also carry marine charterer’s liability insurance. We could sufferlosses for uninsurable or uninsured risks or in amounts in excess of existing insurance coverage. Claims covered by insurance are subject to deductibles, the aggregate amount of which could be material. Insurance policies are also subject to compliance with certain conditions, the failure of which could lead to a denial of coverage as to a particular claim or the voiding of a particular insurance policy. There also can be no assurance that existing insurance coverage can be renewed at commercially reasonable rates or that available coverage will be adequate to cover future claims. The occurrence of an event that is not fully covered by insurance or failure by one or more insurers to honor its coverage commitments for an insured event could have a material adverse effect on our business, financial condition, and results of operations.
We are subject to interruptions of supply and increased costs as a result of our reliance on third-party transportation of conventional and renewable feedstocks and refined products to and from our refineries.
Our refineries receive and transport conventional and renewable feedstocks and refined products via tankers, barges, pipelines, and railcars. In addition to environmental risks, we could experience an interruption of supply or an increased cost to deliver refined products to market if such transportation is disrupted because of adverse weather, accidents, governmental regulation or sanctions, or third-party action. A prolongeddisruption could have a material adverse effect on our business, financial condition, and results of operations.
The financial and operating results of our refineries, including the products they refine and sell, can be seasonal.
Demand for gasoline in the Rockies and Northwest United States is generally higher during the summer months than during the winter months due to seasonal increases in highway traffic. The Montana, Wyoming, and Washington refineries’ financial and operating results for the first and fourth calendar quarters may be lower than those for the second and third calendar quarters of each year as a result of this seasonality. Conversely, the demand for the products the Hawaii refinery refines and sells, and the financial and operating results for the Hawaii refinery, are often strongest in the first and fourth calendar quarters.
We rely upon certain critical information systems for the operation of our business and the failure of any critical information system, including a cybersecurity breach, may result in harm to our business.
We are heavily dependent on our technology infrastructure and maintain and rely upon certain critical information systems for the effective operation of our business. These information systems include data network and telecommunications, internet access and our websites, and various computer hardware equipment and software applications, including those that are critical to the safe operation of our refineries and our pipelines and terminals. Our retail business collects certain customer data, including credit card numbers, for business purposes. The integrity and protection of our customer, employee, and company data is critical to our business.
Our information systems are subject to damage or interruption from a number of potential sources including natural disasters, ransomware, software viruses or other malware, power failures, cyber attacks, and other events. To the extent that these information systems are under our control, we have implemented cybersecurity policies designed to address these risks. However, security measures for information systems cannot be guaranteed to be failsafe. Our systems and procedures for
protecting against such attacks and mitigating such risks may prove to be insufficient in the future and such attacks could have an adverse impact on our business and operations, including damage to our reputation and competitiveness, remediation costs, litigation, or regulatory. Any compromise of our data security or our inability to use or access these information systems at critical points in time could unfavorably impact the timely and efficient operation of our business and subject us to additional costs and liabilities, which could adversely affect our business, financial condition, and results of operations. In addition, as technologies evolve, and cyber attacks become more sophisticated, we may incur significant costs to upgrade or enhance our security measures to protect against such attacks and we may face difficulties in fully anticipating or implementing adequate preventive measures or mitigating potential harm. Finally, federal legislation relating to cybersecurity threats could impose additional requirements on our operations.
Climate change may increase the frequency and severity of weather events that could result in severe personal injury, property damage, and environmental damage, which could curtail our operations and otherwise materially adversely affect our cash flows.
Some scientists have concluded that increasing concentrations of GHG in Earth’s atmosphere may produce climate changes that have significant weather-related effects, such as increased frequency and severity of storms, droughts, floods, and other climatic events. If any of those effects were to occur, they could have an adverse effect on our operations, including damages to our refineries, retail locations, logistics assets or other properties from powerful wind or rising waters. We may experience increased insurance costs, or difficulty obtaining adequate insurance coverage, for our assets in areas subject to more frequent severe weather. We may not be able to recoup these increased costs through the cash generated by our business. Extreme weather events could cause damage to property or facilities that could exceed our insurance coverage and our business, financial condition, and results of operations could be adversely affected. Additionally, if we are named in litigation related to climate change, costs or other impacts resulting from such litigation could be material.
Through our investment in Laramie Energy, we are subject to all of the risks of natural gas and oil exploration and production, but we lack the ability to control Laramie Energy’s operations and our ability to extract value is limited.
Through our investment in Laramie Energy, we are exposed to all of the risks inherent in natural gas and oil exploration and production, including the risks that: exploration and development drilling may not result in commercially productive reserves; the operator may act in ways contrary to our best interest; the marketability of our natural gas products depends mostly on the availability, proximity, and capacity of natural gas gathering systems, pipelines, and processing facilities, which are owned by third parties, as well as adequate water supplies; we have no long-term contracts to sell natural gas or oil; compliance with environmental and other governmental regulatory or legislative requirements could result in increased costs of operation or curtailment, delay, or cancellation of development and producing operations; and a decline in demand for natural gas and oil could adversely affect our financial condition and results of operations.
REGULATORY RISK
Meeting the requirements of evolving environmental, health, and safety laws and regulations, including those related to climate change and marine protection, could adversely affect our performance.
Consistent with the experience of other U.S. refineries, environmental laws and regulations have raised operating costs and may require significant capital investments at our refineries. We may be required to address conditions that may be discovered in the future and require a response. Potentially material expenditures could be required in the future as a result of evolving environmental, health, and safety and energy laws, regulations, or requirements that may be adopted or imposed in the future. Future developments in federal and state laws and regulations governing environmental, health and safety, and energy matters are especially difficult to predict.
Currently, multiple legislative and regulatory measures to address GHG emissions (including CO 2 , methane, and NO X ) are in various phases of consideration, promulgation, or implementation. These include actions to develop national, statewide, or regional programs, each of which could require reductions in our GHG emissions. Requiring reductions in our GHG emissions could result in increased costs to (i) operate and maintain our facilities, (ii) install new emission controls at our facilities, and/or (iii) administer and manage any GHG emissions programs, including acquiring emission credits or allotments. Requiring reductions in our GHG emissions and increased use of renewable fuels which can be supplied by producers and marketers in other industries that supply alternative forms of energy and fuels to satisfy the requirements of our industrial, commercial, and individual customers could also decrease the demand for our refined products, and could have a material adverse impact on our business, financial condition, and results of operations.
Additionally, legislation designed to protect animal and plant species, such as the Magnuson amendment to the Marine Mammal Protection Act, may limit or restrict our ability to construct or expand new oil terminals and oil-by-rail infrastructure
in the state of Washington, which could have a material impact on our business, financial condition, and results of operations. Finally, federal and state regulations requiring additional GHG-related disclosures could significantly increase our regulatory compliance costs.
Renewable fuels mandates and other mandates may reduce demand for the petroleum fuels we produce, which could have a material adverse effect on our business results of operations and financial condition.
The RFS program sets annual quotas for the quantity of renewable fuels that must be blended into transportation fuels consumed in the U.S. A RIN is assigned to each gallon of renewable fuel produced in or imported into the U.S. As a producer of petroleum-based transportation fuels, we are obligated to blend renewable fuels into the petroleum fuels we produce and sell in the U.S. To the extent we do not, we are required to purchase RINs in the market to satisfy our obligations under the RFS program. In addition, as a result of the annual volume mandates, we may experience a decrease in demand for refined products due to refined products being replaced by renewable fuels.
We are exposed to the volatility in the market price of RINs and are unable to predict the future prices of RINs. RINs prices are dependent upon a variety of factors, including EPA regulations, the availability of RINs for purchase, and levels of transportation fuels produced, which can vary significantly from quarter to quarter. If sufficient RINs are unavailable for purchase, if we have to pay a significantly higher price for RINs, or if we are otherwise unable to meet the EPA’s RFS mandates, our results of operations and cash flows could be adversely affected. The current administration has also been critical of exemptions from the RFS mandates granted to small refineries during the previous administration. While litigation over the issue is currently before various courts, the EPA under the current administration may be less willing to grant such waivers going forward and may increase the RVO in future years. To the extent fewer waivers are granted in the future or the RVO is increased, the demand for and the price of RINs would likely also increase, and our results of operations and cash flows could be adversely affected. In addition, the EPA is considering changes to the existing RFS program regulations and other regulatory initiatives under the RFS program that could impact future standards. Although uncertain, any of these events may cause the price of RINs to rise and result in additional costs in connection with RFS compliance. Such increased costs could be material and may have a material adverse impact on our business, financial condition, and results of operations. All RIN transactions are recorded in the EPA Moderated Transaction System (“EMTS”). Under this system, purchasers of RINs are required to self-certify their validity without verification by the EPA, and are responsible for any invalid RINs submitted to the EPA for compliance. We believe that the RINs we purchase are from reputable sources, are valid, and serve to demonstrate compliance with applicable RFS requirements. However, if this belief proves incorrect and the RINs that we purchase are not valid or in compliance with applicable RFS requirements, our financial condition and cash flows may be adversely affected. In addition, renewable diesel and other renewable fuel prices are influenced by petroleum fuel prices, renewable fuel production levels and environmental credit markets, which may experience significant volatility. Sustained declines in renewable product or credit prices could adversely affect the profitability of our renewable operations.
Several states, including Washington and Hawaii, have pursued or are considering initiatives designed to reduce the carbon intensity of the transportation sector by encouraging increased use of renewable fuels or electric vehicles or by requiring reductions in transportation fuel-related GHG emissions in the state. Since 2006, the State of Washington has required that denatured ethanol make up at least 2% of total gasoline sold in the state and that biodiesel comprise at least 2% of total diesel sold in the state, and the Washington Department of Ecology is authorized to increase these requirements if certain conditions are met. In 2020 and 2021 the State of Washington adopted several statutes that are relevant to our operations in the state of Washington including a law approving new regulatory requirements regarding zero emission vehicles and a low-carbon fuel standard designed to reduce the carbon intensity of transportation fuels by twenty percent by 2038. Legislation signed in March of 2020 directed the Washington Department of Ecology to adopt California’s vehicle emission standards including requirements to increase zero emission vehicles sold in the state. Washington Department of Ecology adopted by reference California’s zero emission vehicle standard starting with model year 2025 in a rule issued on November 29, 2021. In 2014, the State of Hawaii signed a memorandum of understanding with the U.S. Department of Energy to collaborate to produce 70% of the state’s energy needs from energy-efficient and renewable sources by 2030 and 100% of the state’s energy needs from energy-efficient and renewable sources by 2045. In addition, Hawaii’s alternative fuels standard requires the State to facilitate the development of alternate fuels so such fuels provide 20% of highway fuel demand by 2020 and 30% by 2030. Finally, California and a small number of other states have announced a ban on new internal combustion engine-powered cars by 2035. These state actions could reduce demand for our refined petroleum products, which could have a material adverse effect on our business, results of operations, and financial condition.
Potential legislative and regulatory actions addressing climate change could increase our costs, reduce our revenue and cash flow from operations, or otherwise alter the way we conduct our business.
Currently, multiple legislative and regulatory measures to address GHG, including CO 2 , methane, and NO X , and other emissions are in various phases of consideration, promulgation, or implementation at various levels of the federal and state government. These include actions to develop international, federal, regional, or statewide programs, which could require reductions in our GHG or other emissions, establish a carbon tax and decrease the demand for our refined products. Requiring reductions in these emissions could result in increased costs to (i) operate and maintain our facilities, (ii) install new emission controls at our facilities, and (iii) administer and manage any emissions programs, including acquiring emission credits or allotments.
For example, in 2015, the U.S., Canada, and the U.K. participated in the United Nations Conference on Climate Change, which led to the creation of the Paris Agreement. The Paris Agreement, which was signed by the U.S. in April 2016, requires countries to review and “represent a progression” in their intended nationally determined contributions (which set GHG emission reduction goals) every five years beginning in 2020. In November 2020, the United States’ previously announced withdrawal from the Paris Agreement became effective. On January 20, 2021, President Biden announced that the United States would be reentering the Paris Agreement. This reentry became effective on February 19, 2021, however, on January 20, 2025, President Trump signed Executive Order 14162 directing the U.S. government to again withdraw from the Paris Agreement.
The EPA has issued a notice of finding and determination that emissions of CO 2 , methane, and other GHGs present an endangerment to human health and the environment. In response, the EPA has adopted regulations under existing provisions of the federal Clean Air Act that, among other things, establish Prevention of Significant Deterioration (“PSD”) construction and Title V operating permit program requiring reviews for GHG emissions from certain large stationary sources. Facilities required to obtain PSD permits for their GHG emissions will also be required to meet “best available control technology” standards, which will be established by the states or, in some instances, by the EPA on a case-by-case basis. In addition, the EPA has adopted rules requiring the monitoring and reporting of GHG emissions from specified large GHG emission sources in the U.S., including petroleum refineries and certain onshore petroleum and natural gas production activities, on an annual basis. We monitor for GHG emissions at our refineries and believe we are in substantial compliance with the applicable GHG reporting requirements. Certain of the third-party drilling and production entities in which we hold a working interest also may be subject to reporting of GHG emissions in the U.S. These EPA policies and rulemakings could adversely affect our operations and restrict or delay our ability to obtain air permits for new or modified facilities.
In addition, from time to time, the U.S. Congress has considered and may in the future consider and adopt “cap and trade” legislation that would establish an economy-wide cap on GHG emissions in the U.S. and would require most sources of GHG emissions to obtain emission “allowances” corresponding to their annual GHG emissions. For those GHG sources that are unable to meet the required limitations, such legislation could impose substantial financial burdens. Any laws or regulations that may be adopted to restrict or reduce GHG emissions would likely require us to incur increased operating costs and could have an adverse effect on demand for our production. The adoption of any legislation or regulations that limits emissions of GHG from our or such drilling and production entities’ facilities, equipment, and operations could require us or such entities to incur costs to reduce emissions of GHG associated with our or such entities’ operations or could adversely affect demand for the refined petroleum products that we produce or the crude oil or natural gas that such drilling and production entities in which we hold a working interest produce.
At the state level, Washington and other states have passed low carbon fuel standard legislation and other initiatives, including a cap and invest program, to reduce emissions from the transportation sector. We could also face increased climate-related litigation with respect to our operations or products. If we are unable to pass the costs of compliance on to our customers, sufficient credits are unavailable for purchase, we have to pay a significantly higher price for credits, or we are otherwise unable to meet our compliance obligation, our financial condition and results of operations could be adversely affected.
Federal, regional, and state climate change and air emissions goals and regulatory programs under the Clean Air Act are complex, subject to change, and create uncertainty due to a number of factors including technological feasibility, legal challenges, and potential changes in federal policy. Nevertheless, stricter regulation can be expected in the future and any of these or similar changes, including a switch to alternative fuels such as liquified natural gas for power generation, or regulatory enforcement in connection with such requirements, may have a material adverse impact on our business, results of operations, and financial condition. For more information, please read “Note 19—Commitments and Contingencies” to our consolidated financial statements under Item 8 of this Form 10-K .
Regulatory and other requirements concerning the transportation of crude oil and other commodities by rail may cause increases in transportation costs or limit the amount of crude oil that we can transport by rail.
We rely on a variety of systems to transport crude oil, including rail. Rail transportation is regulated by federal, state, and local authorities. New regulations or changes in existing regulations could result in increased compliance expenditures. For example, in 2019 Washington enacted a law that limits crude oil by rail deliveries through a cap on off-loadings from existing facilities and new specifications regarding the vapor pressure of crude oils permitted to be shipped through the state. These or other regulations that require the reduction of volatile or flammable constituents in crude oil that is transported by rail, change the design or standards for rail cars used to transport the crude oil we purchase, change the routing or scheduling of trains carrying crude oil, or require any other changes that detrimentally affect the economics of delivering North American crude oil by rail, could increase the time required to move crude oil from production areas to our refineries, increase the cost of rail transportation, and decrease the efficiency of shipments of crude oil by rail within our operations. Any of these outcomes could have a material adverse effect on our business, results of operations, and financial condition.
We will be required to undertake significant environmental remediation and other corrective actions in connection with certain prior acquisitions.
For example, in connection with the July 14, 2016 purchase of Hermes Consolidated, LLC (d/b/a Wyoming Refining Company) and, indirectly, Wyoming Refining Company’s wholly owned subsidiary, Wyoming Pipeline Company, LLC (collectively, “Wyoming Refining” or “WRC”) (the “WRC Acquisition”), there are several environmental conditions that will require us to undertake significant remediation efforts and other corrective actions. The Wyoming refinery is subject to a number of consent decrees, orders, and settlement agreements involving the EPA and/or the Wyoming Department of Environmental Quality, some of which date back to the late 1970s and several of which remain in effect, requiring further actions at the Wyoming refinery.
As is typical of older, small refineries like the Wyoming refinery, the largest cost component arising from these various decrees relates to the investigation, monitoring, and remediation of soil, groundwater, surface water, and sediment contamination associated with the facility’s historic operations. Investigative work by Wyoming Refining and negotiations with the relevant agencies as to remedial approaches remain ongoing on a number of aspects of the contamination, meaning that investigation, monitoring, and remediation costs are not reasonably estimable for some elements of these efforts. As of December 31, 2025, we have accrued $15.8 million for the well-understood components of these efforts based on current information, approximately one-third of which we expect to incur in the next five years and the remainder to be incurred over approximately 25 years. Additionally, we believe the Wyoming refinery will need to modify or close a series of wastewater impoundments in the next several years, which will include remediation of soil in the impoundments to increase capacity and bring them to a usable state. Based on current information, reasonable estimates we have received suggest costs of approximately $11.6 million to complete these projects.
We also assumed certain environmental liabilities associated with the Billings Acquisition, including costs related to hazardous waste corrective measures, and ground and surface water sampling and monitoring. Based on current information, reasonable estimates we have received suggest the aggregate amount of these liabilities to be approximately $8.6 million. We expect to incur these costs over a 20 to 30 year period.
We may incur significant costs and liabilities resulting from performance of pipeline integrity programs and related repairs.
Pipeline and Hazardous Materials Safety Administration (“PHMSA”) has established a series of rules requiring pipeline operators to develop and implement integrity management programs for hazardous liquid pipelines that, in the event of a pipeline leak or rupture, could affect high consequence areas (“HCAs”), which are areas where a release could have the most significant adverse consequences, including high-population areas, certain drinking water sources, and unusually sensitive ecological areas. These regulations require operators of covered pipelines to:
• perform ongoing assessments of pipeline integrity;
• identify and characterize applicable threats to pipeline segments that could impact an HCA;
• improve data collection, integration, and analysis;
• repair and remediate the pipeline as necessary; and
• implement preventive and mitigating actions.
In addition, certain states have also adopted regulations similar to existing PHMSA regulations for intrastate gathering and transmission lines. These requirements could require us to install new or modified safety controls, pursue additional capital projects, or conduct maintenance programs on an accelerated basis, any or all of which tasks could result in us incurring
increased operating costs that could be significant and have a material adverse effect on our financial position or results of operations. Additionally, we are subject to periodic inspection and audit regarding these requirements.
Moreover, changes to pipeline safety laws by Congress and regulations by PHMSA that result in more stringent or costly safety standards could result in our incurring increased operating costs that could have a material adverse effect on our financial position or results of operations. Finally, while we have incurred certain additional costs associated with operating a pipeline regulated by the Federal Energy Regulatory Commission, our costs to date have not been material.
Compliance with and changes in tax laws could materially and adversely affect our financial condition, results of operations and cash flows.
We are subject to extensive tax liabilities imposed by multiple jurisdictions including, without limitation, income taxes, indirect taxes (excise/duty, sales/use, gross receipts, GHG emissions), payroll taxes, franchise taxes, withholding taxes, and ad valorem taxes. New tax laws and regulations and changes in existing tax laws and regulations are continuously being enacted or proposed that could result in increased expenditures for tax liabilities in the future. Many of these liabilities are subject to periodic audits by the respective taxing authority. Although we believe we have used reasonable interpretations and assumptions in calculating our tax liabilities, the final determination of these tax audits and any related proceedings cannot be predicted with certainty. Any adverse outcome of such tax audits or related proceedings could result in unforeseen tax-related liabilities that may, individually or in the aggregate, materially affect our cash tax liabilities, results of operations, and financial condition. Additionally, tax rates or tax interpretations in the various jurisdictions in which we operate may change significantly as a result of political or economic factors beyond our control. For more information, please read “Note 19—Commitments and Contingencies” to our consolidated financial statements under Item 8 of this Form 10-K . Additionally, our renewable fuels operations may be eligible for certain federal or state tax credits or incentives, and any modification, reduction, or elimination of such credits, or changes in their availability, could adversely affect or results of operations and cash flows.
BUSINESS RISKS
The locations of our refineries and related assets in certain limited geographic areas create an exposure to localized economic risks.
Because of the locations of our refineries in Hawaii, Montana, Washington, and Wyoming, we primarily market our refined products in relatively limited geographic areas. As a result, we are more susceptible to regional economic conditions than the operations of more geographically diversified competitors and any unforeseen events or circumstances that affect our operating areas could also materially adversely affect our revenues and our business and operating results. These factors include, among other things, changes in the economy, weather conditions, demographics and population, refined product mix demand, increased supply of refined products from competitors, and reductions in the supply of crude oil.
We must make substantial capital expenditures and complete periodic turnarounds at our refineries and related assets to maintain their reliability and efficiency. If we are unable to complete capital projects at their expected costs or in a timely manner, or if the market conditions assumed in our project economics deteriorate, our financial condition, results of operations, or cash flows could be adversely affected.
Our refineries and related assets have been in operation for many years. Equipment, even if properly maintained, may require significant capital expenditures and expenses to keep the refineries operating at optimum efficiency. These costs do not result in increases in unit capacities, but rather are focused on trying to maintain safe, reliable operations.
Delays or cost increases related to the engineering, procurement, and construction of new facilities, or improvements and repairs to our existing facilities and equipment during periodic turnarounds, could have a material adverse effect on our business, financial condition, or results of operations. Such delays or cost increases may arise as a result of unpredictable factors in the marketplace, many of which are beyond our control, including:
• denial or delay in obtaining regulatory approvals and/or permits;
• difficulties in executing the capital projects;
• unplanned increases in the cost of equipment, materials, or labor;
• disruptions in transportation of equipment and materials;
• severeadverse weather conditions, natural disasters, or other events (such as equipment malfunctions, explosions, fires, or spills) affecting our facilities, or those of our vendors and suppliers;
• shortages of sufficiently skilled labor, or labor disagreements resulting in unplanned work stoppages;
• market-related increases in a project’s debt or equity financing costs; and/or
• non-performance or force majeure by, or disputes with, our vendors, suppliers, contractors, or sub-contractors.
Any one or more of these occurrences noted above could have a significant impact on our business. If we are unable to make up the delays or to recover the related costs, or if market conditions change, it could materially and adversely affect our financial position, results of operations, or cash flows.
The retail market is diverse and highly competitive.
We face strong competition in the market for the sale of retail gasoline, diesel fuel, and merchandise. Our competitors include outlets owned or operated by fully integrated major oil companies or their dealers and other well-recognized national or regional retail outlets, often selling products at very competitive prices. We compete with a number of integrated national and international oil companies who produce crude oil, some of which is used in their refining operations. Unlike these oil companies, we must purchase all of our crude oil from unaffiliated sources. Because these oil companies benefit from increased commodity prices, have greater access to capital, and have stronger capital structures, they are able to better withstand poor and volatile market conditions, such as a lower refining margin environment, shortages of crude oil and other feedstocks, or extreme price fluctuations. Non-traditional retailers such as supermarkets, club stores, and mass merchants are also in the retail business, and these non-traditional gasoline retailers have obtained a significant share of the transportation fuels market. These retailers may use integration of operations, greater financial resources, promotional pricing or discounts, or other advantages to withstand volatile market conditions or levels of no or low profitability.
The development of alternative and competing products could adversely impact our business.
The development of alternative and competing products, including a switch to fuels such as liquified natural gas for power generation, could adversely impact our business. Increased competition from these alternatives as a result of governmental regulations, technological advances, and consumer demand could have an impact on demand for our products and could change the way in which we operate our assets.
If we are unable to obtain crude oil supplies for our refineries without the benefit of our Inventory Intermediation Agreement and ABL Credit Facility, the capital required to finance our crude oil supply could negatively impact our liquidity.
Crude oil in storage tanks and certain crude oil in transit at our Hawaii refinery is subject to our Inventory Intermediation Agreement. Deliveries of crude oil at our other refineries are subject to the ABL Credit Facility. If we are unable to obtain our crude oil supply for our refineries under these agreements, our exposure to crude oil pricing risks may increase as the number of days between when we pay for the crude oil and when the crude oil is delivered to us increases. Such increased exposure could negatively impact our liquidity position due to the increase in working capital used to acquire crude oil inventory for our refineries.
The Inventory Intermediation Agreement expose us to counterparty credit and performance risk.
We have the Inventory Intermediation Agreement with Citigroup Energy Inc. (“Citi”), pursuant to which Citi will purchase and deliver crude oil to our Hawaii refinery. Upon termination of the Inventory Intermediation Agreement, we are obligated to repurchase all crude oil inventories then owned by Citi. This repurchase obligation could have a material adverse effect on our business, results of operations, or financial condition. Our agreement with Citi also requires us to pay interest expense associated with the facility, which will increase in a rising crude oil price and interest rate environment. An adverse change in the business, results of operations, liquidity, or financial condition of one of our counterparties could adversely affect the ability of such counterparty to perform its obligations, which could consequently have a material adverse effect on our business, results of operations, or liquidity and, as a result, our business and operating results.
Inadequate liquidity could materially and adversely affect our business operations in the future.
If our cash flow and capital resources are insufficient to fund our obligations, we may be forced to reduce our capital expenditures, seek additional equity or debt capital, or restructure our indebtedness. We cannot assure you that any of these remedies could, if necessary, be affected on commercially reasonable terms, or at all. Our liquidity is constrained by our need to satisfy our obligations under our debt agreements, and the Inventory Intermediation Agreement. The availability of capital when the need arises will depend upon a number of factors, some of which are beyond our control. These factors include general economic and financial market conditions, the crack spread, natural gas and crude oil prices, our credit ratings, interest rates, market perceptions of us or the industries in which we operate, our market value, and our operating performance. We may be unable to execute our long-term operating strategy if we cannot obtain capital from these or other sources when the need arises.
Our ability to generate cash and repay our indebtedness or fund capital expenditures depends on many factors beyond our control and any failure to do so could harm our business, financial condition, and results of operations.
Our ability to fund future capital expenditures and repay our indebtedness when due will depend on our ability to generate sufficient cash flow from operations, borrowings under our debt agreements, and distributions from our subsidiaries. To a certain extent, this is subject to general economic, financial, competitive, legislative, and regulatory conditions and other factors that are beyond our control, including crack spreads.
We cannot assure you that our businesses will generate sufficient cash flow from operations, that our subsidiaries can or will make sufficient distributions to us, or that future borrowings will be available to us in an amount sufficient to repay our indebtedness or fund our other liquidity needs. If our cash flow and capital resources are insufficient to fund our needs, we may be forced to reduce our planned capital expenditures, sell assets, seek additional equity or debt capital, or restructure our debt. We cannot assure you that any of these remedies could, if necessary, be affected on commercially reasonable terms, or at all, which could cause us to default on our obligations and could impair our liquidity.
Our substantial level of indebtedness could adversely affect our financial condition.
We have a substantial amount of indebtedness, which requires significant interest payments. As of December 31, 2025, we had $0.8 billion of indebtedness and Interest expense and financing costs, net for the year ended December 31, 2025, was $82.4 million.
Our substantial level of indebtedness could have important consequences, including the following:
• we must use a substantial portion of our cash flow from operations to pay interest and principal on our indebtedness and obligations under the Inventory Intermediation Agreement, which reduces funds available to us for other purposes, such as working capital, capital expenditures, other general corporate purposes, and potential acquisitions;
• our ability to refinance such indebtedness or to obtain additional financing for working capital, capital expenditures, acquisitions, or general corporate purposes may be impaired;
• our leverage may be greater than that of some of our competitors, which may put us at a competitive disadvantage and reduce our flexibility in responding to current and changing industry and financial market conditions;
• we may be more vulnerable to economic downturns and adverse developments in our business; and
• we may be unable to comply with financial and other restrictive covenants in our debt agreements, some of which require us to maintain specified financial ratios and limit our ability to incur additional debt and sell assets, which could result in an event of default that, if not cured or waived, would have an adverse effect on our business and prospects and could result in bankruptcy.
Our ability to meet expenses, to remain in compliance with the covenants under our debt agreements, and to make future principal and interest payments in respect of our debt depends on, among other things, our operating performance, competitive developments, and financial market conditions, all of which are significantly affected by financial, business, economic, and other factors. We are not able to control many of these factors. If industry and economic conditions deteriorate, our cash flow may not be sufficient to allow us to pay principal and interest on our debt and meet our other obligations.
This increase in our indebtedness may reduce our flexibility to respond to changing business and economic conditions or to fund capital expenditure or working capital needs because we will require additional funds to service our outstanding indebtedness and may not be able to obtain additional financing.
Despite our current debt levels, we may still incur substantially more debt or take other actions which would intensify the risks associated with our substantial leverage.
Despite our current consolidated debt levels, we may be able to incur significant additional indebtedness in the future. Although our debt agreements contain restrictions on the incurrence of additional indebtedness and entering into certain types of other transactions, these restrictions are subject to a number of qualifications and exceptions. Additional indebtedness incurred in compliance with these restrictions could be substantial. These restrictions also do not prevent us or our subsidiaries from incurring obligations, such as trade payables, that do not constitute indebtedness as defined under our debt agreements. To the extent new debt is added to our current debt levels, the substantial leverage risks associated with our indebtedness would increase.
Our debt agreements impose significant operating and financial restrictions on us.
Our debt agreements impose, and the terms of any future debt may impose, significant operating and financial restrictions on us. These restrictions, among other things, may limit our ability to:
• pay dividends or distributions, repurchase equity, prepay junior debt, and make certain investments, loans, or acquisitions;
• incur additional debt, make guarantees of debt, or issue certain disqualified stock and preferred stock;
• sell or otherwise dispose of assets, including capital stock of subsidiaries;
• incur liens;
• enter into certain hedging transactions;
• consummate fundamental changes, merge or consolidate with another company, sell all or substantially all assets, or alter the business;
• enter into certain transactions with affiliates; and
• enter into agreements that would restrict the ability of our subsidiaries to pay dividends or distributions.
All of these covenants may adversely affect our ability to finance our operations, meet or otherwise address our capital needs, pursue business opportunities, react to market conditions, or otherwise restrict activities or business plans. A breach of any of these covenants could result in a default in respect of the related indebtedness. If a default occurs, the requisite lenders could elect to declare the indebtedness, together with accrued interest and other fees, to be immediately due and payable and proceed against any collateral securing that indebtedness. If repayment of our indebtedness is accelerated as a result of such default, we cannot assure you that we would have sufficient assets or access to credit to repay such indebtedness.
We may incur losses and incur additional costs as a result of our forward-contract activities and derivative transactions.
We enter into derivative contracts from time to time primarily to reduce our exposure to fluctuations in interest rates and in the price of crude oil and refined products. If the instruments we use to hedge our exposure are not effective, or if our counterparties are unable to satisfy their obligations to us, we may incur losses. We may also be required to incur additional costs in connection with future regulation of derivative instruments to the extent such regulation is applicable to us. Additionally, our commodity derivative activities may produce significant period-to-period earnings volatility that is not necessarily reflective of our underlying operational performance.
Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly and otherwise impact our ability to incur indebtedness for acquisitions and working capital needs.
We are subject to interest rate risk in connection with borrowings under certain of our debt agreements as well as our Inventory Intermediation Agreement, which bear interest at variable rates. Interest rate changes will not affect the market value of indebtedness incurred under such debt agreements, but could affect the amount of our interest payments and, accordingly, our future earnings and cash flows, assuming other factors are held constant. Increases in interest rates could also impact our ability to incur indebtedness to fund acquisitions and working capital needs. Since 2024, interest rates have been significantly higher than in recent years and a significant increase in prevailing interest rates that results in a substantial increase in the interest rates applicable to our indebtedness could substantially increase our interest expense and have a material adverse effect on our financial condition, results of operations, and cash flows.
We cannot be certain that our net operating loss tax carryforwards will continue to be available to offset our tax liability.
As of December 31, 2025, we estimated that we had approximately $0.7 billion of net operating loss (“NOL”) tax carryforwards. In order to utilize the NOLs, we must generate taxable income that can offset such carryforwards. The availability of NOLs to offset taxable income would be substantially reduced or eliminated if we were to undergo an “ownership change” within the meaning of Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). We will be treated as having had an “ownership change” if there is more than a 50% increase in stock ownership during any three year “testing period” by “5% shareholders.” In order to help us preserve our NOLs, our certificate of incorporation contains stock transfer restrictions designed to reduce the risk of an ownership change for purposes of Section 382 of the Code. We expect that the restrictions will remain in place for the foreseeable future. We cannot assure you, however, that these restrictions will prevent an ownership change.
Our ability to utilize a significant portion of our NOLs to offset future taxable income is subject to various limitations, including that certain NOLs will expire in various amounts, if not used, between 2031 through 2037. During 2018, the Internal Revenue Service (“IRS”) completed an audit of our tax returns for the tax years ending 2014 through 2016, which included those returns for the years in which the losses giving rise to the NOLs were reported. Although the IRS made no challenge of
the availability of our NOLs during this audit, we cannot assure you that we would prevail if the IRS were to challenge the availability of the NOLs in the event of future audits. If the IRS were successful in challenging our NOLs, all or some portion of the NOLs would not be available to offset any future consolidated income, which would negatively impact our results of operations and cash flows. Certain provisions of the Tax Cuts and Jobs Act, enacted in 2017, may also limit our ability to utilize our net operating tax loss carryforwards.
We may be unable to successfully identify, execute, or effectively integrate future acquisitions, which may negatively affect our results of operations.
We will continue to pursue acquisitions in the future. Although we regularly engage in discussions with, and submit proposals to, acquisition candidates, suitable acquisitions may not be available in the future on reasonable terms. If we do identify an appropriate acquisition candidate, we may be unable to successfully negotiate the terms of an acquisition, finance the acquisition, or, if the acquisition occurs, effectively integrate the acquired business into our existing businesses. Negotiations of potential acquisitions and the integration of acquired business operations may require a disproportionate amount of management’s attention and our resources. Even if we complete additional acquisitions, continued acquisition financing may not be available or available on reasonable terms, any new businesses may not generate the anticipated level of revenues, the anticipated cost efficiencies, or synergies may not be realized, and these businesses may not be integrated successfully or operated profitably. Our inability to successfully identify, execute, or effectively integrate future acquisitions may negatively affect our results of operations.
Acquisitions may prove to be worth less than we paid because of uncertainties in evaluating potential liabilities.
Our recent growth is due in large part to acquisitions, such as the acquisitions of our Montana refining business. We expect acquisitions to be instrumental to our future growth. Successful acquisitions require an assessment of a number of factors, including estimates of potential unknown and contingent liabilities. Such assessments are inexact and their accuracy is inherently uncertain. In connection with our assessments, we perform due diligence reviews of acquired businesses and assets that we believe are generally consistent with industry practices. However, such reviews will not reveal all existing or potential problems. In addition, our reviews may not permit us to become sufficiently familiar with potential environmental problems or other contingent and unknown liabilities that may exist or arise. As a result, there may be unknown and contingent liabilities related to acquired businesses and assets of which we are unaware. We could be liable for unknown obligations relating to acquisitions for which indemnification is not available, which could materially adversely affect our business, results of operations, and cash flows.
Our renewable fuels manufacturing facility co-located with our Hawaii refinery (the “Renewable Fuels Facility”) may not commence operations when we expect, or at all, and, if completed, we may not be able to successfully integrate the Renewable Fuels Facility into our business or realize the anticipated benefits of this investment.
On October 21, 2025, we established a joint venture with Alohi Renewable Energy LLC (“Alohi”), for the development, construction, ownership, and operation of the Renewable Fuels Facility. There can be no assurance that we will complete the Renewable Fuels Facility on the timeframe that we anticipate, or at all. Failure to complete the Renewable Fuels Facility or any delays in completing it could have an adverse impact on our future business and operations. In addition, we will have incurred significant capital and investment-related expenses without realizing all of the expected benefits.
Additionally, if the Renewable Fuels Facility is completed, we will have certain obligations and liabilities to the joint venture, as a subsidiary of the Company will serve as the construction manager, operator and provider of services. Further, the joint venture will be operated as a separate entity, and we will not fully control its operations. There can be no assurance that we will realize the anticipated benefits and operating synergies of the Renewable Fuels Facility or the joint venture. Our estimates regarding the earnings, operating cash flow, capital expenditures, and liabilities resulting from this investment may prove to be incorrect. This project involves risks, including:
• diversion of management time and attention from our existing business;
• reliance on our joint venture partner and its financial condition;
• risk that our joint venture partner does not always share our goals and objectives; and
• certain obligations that we have to fund capital expenditures relating to the Renewable Fuels Facility.
A substantial portion of our refining workforce is unionized and we may face labor disruptions that would interfere with our operations.
As of December 31, 2025, we employed a total of 1,758 employees. Of this total, 395 employees, representing approximately 22% of our workforce, were employed at our Hawaii, Washington, and Montana refineries and were represented
by the United Steelworkers Union under collective bargaining agreements that expired January 31, 2026, and are currently subject to 24-hour extension periods while the parties continue their negotiations. In addition, three employees in our Mainland Logistics business in Montana were represented by the Rocky Mountain Union under an agreement effective through October 1, 2026. However, we may not be able to prevent a strike or work stoppage in the future and any such work stoppage could cause disruptions in our business and have a material adverse effect on our business, financial condition, results of operations, and cash flows.
Changes in the availability of and the cost of labor could adversely affect our business.
Changes in labor markets due to various factors, including inflationary pressures, have increased the competition for recruiting and retaining talent. As a result of these factors, our business could be adversely impacted by increases in labor, health care, and benefits costs necessary to attract and retain high quality employees with the right skill sets to meet our needs. In addition, our wages and benefits programs may be insufficient to attract and retain top performing employees, especially in a rising wage market. Any failure by us to attract, develop, retain, motivate, and maintain good relationships with qualified individuals could adversely affect our business and results of operations.
Technological change or adverse changes in global economic conditions could affect the demand for transportation fuels and impact our business and financial condition in ways that we currently cannot predict.
A recession or prolonged economic downturn would adversely affect the business and economic environment in which we operate. These conditions increase the risks associated with the creditworthiness of our suppliers, customers, and business partners. The consequences of such adverse effects could include interruptions or delays in our suppliers’ performance of our contracts, reductions and delays in customer purchases, delays in or the inability of customers to obtain financing to purchase our products, and bankruptcy of customers. Additionally, technological changes or innovations related to, among other things, electric vehicles or autonomous driving may create risks to our business that we are unable to predict. Any of these events may adversely affect our financial condition, cash flows, and profitability.
RISKS RELATED TO OUR COMMON STOCK
Because we have no near term plans to pay cash dividends on our common stock, investors must look solely to stock appreciation for a return on their investment in us.
We have never declared or paid any cash dividends on our common stock. We currently intend to retain all available funds and any future earnings for use in the operation and expansion of our business and do not anticipate declaring or paying any cash dividends on our common stock in the near term. Any future determination as to the declaration and payment of cash dividends will be at the discretion of our board of directors and will depend on then-existing conditions, including our financial condition, results of operations, contractual restrictions, capital requirements, business prospects, and other factors that our board of directors considers relevant.
If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding our common stock, or if our operating results do not meet their expectations, our stock price could decline.
The trading market for our common stock is influenced by the research and reports that industry or securities analysts publish about us or our business. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. Moreover, if one or more of the analysts who cover our company downgrades our common stock or if our operating results do not meet their expectations, our stock price could decline.
The price of our common stock historically has been volatile. This volatility may affect the price at which you could sell your common stock.
The market price for our common stock has varied between a high of $47.20 on December 1, 2025, and a low of $12.23 on April 15, 2025, during the year ended December 31, 2025. This volatility may affect the price at which you could sell your common stock. Our stock price is likely to continue to be volatile and subject to significant price and volume fluctuations in response to market and other factors; variations in our quarterly operating results from our expectations or those of securities analysts or investors; downward revisions in securities analysts’ estimates; and announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, or capital commitments.
An impairment of an equity investment, a long-lived asset, or goodwill could reduce our earnings or negatively impact the value of our common stock.
Consistent with U.S. generally accepted accounting principles (“GAAP”), we evaluate our goodwill for impairment at least annually and our equity investments and long-lived assets, including intangible assets with finite useful lives, whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. For the investments we account for under the equity method, such as Laramie Energy, the impairment test requires us to consider whether the fair value of the equity investment as a whole, not the underlying net assets, has declined and whether that decline is other than temporary. If we determine that an other-than-temporary impairment is indicated, we would be required to recognize a non-cash charge to earnings with a correlative effect on equity and balance sheet leverage as measured by debt to total capitalization. Any impairment charges could have a negative impact on the price of our common stock. Additionally, there can be no assurance that no future impairment charge will be made with respect to our equity investments, goodwill, and long-lived assets.
The market for our common stock has been historically illiquid, which may affect your ability to sell your shares.
The volume of trading in our common stock has historically been low. The lack of substantial liquidity can adversely affect the price of our stock at a time when you might want to sell your shares. There is no guarantee that an active trading market for our common stock will develop or be maintained on the NYSE, or that the volume of trading will be sufficient to allow for timely trades. Investors may not be able to sell their shares quickly or at the latest market price if trading in our stock is not active or if trading volume is limited. In addition, if trading volume in our common stock is limited, trades of relatively small numbers of shares may have a disproportionate effect on the market price of our common stock.
Delaware law, our charter documents, and concentrated stock ownership may impede or discourage a takeover, which could reduce the market price of our common stock.
We are a Delaware corporation and the anti-takeover provisions of Delaware law impose various impediments to the ability of a third party to acquire control of us, even if a change in control would be beneficial to our existing stockholders. For example, the change in ownership limitations contained in Article 11 of our certificate of incorporation could have the effect of discouraging or impeding an unsolicited takeover proposal. In addition, our board of directors or a committee thereof has the power, without stockholder approval, to designate the terms of one or more series of preferred stock and issue shares of preferred stock. The ability of our board of directors or a committee thereof to create and issue a new series of preferred stock and certain provisions of Delaware law and our certificate of incorporation and bylaws could impede a merger, takeover, or other business combination involving us or discourage a potential acquirer from making a tender offer for our common stock, which, under certain circumstances, could reduce the market price of our common stock.
Based on Schedule 13G filed on April 30, 2025, Blackrock, Inc., together with its affiliates, owns or had the right to acquire approximately 13.8% of our outstanding common stock. Based on Schedule 13G filed on November 5, 2025, The Vanguard Group, together with its affiliates, owns or had the right to acquire approximately 10.3% of our outstanding common stock. This level of ownership of shares of our common stock could have the effect of discouraging or impeding an unsolicited acquisition proposal.
We may issue preferred stock with terms that could adversely affect the voting power or value of our common stock and any future issuances of our common stock may reduce our stock price.
Our certificate of incorporation authorizes us to issue, without the approval of our stockholders, one or more classes or series of preferred stock having such designations, preferences, limitations, and relative rights, including preferences over our common stock respecting dividends and distributions, as our board of directors may determine. The terms of one or more classes or series of preferred stock could adversely impact the voting power or value of our common stock.
Additionally, we are not restricted from issuing additional shares of common stock, or securities convertible into common stock, under a registration statement declared effective by the SEC. We cannot predict the size of future issuances of our common stock. However, one or more large issuances of our common stock, or securities convertible into our common stock, may adversely affect the prevailing market price of our common stock.
Investor sentiment towards climate change, fossil fuels, sustainability, and other Environmental, Social, and Governance (“ESG”) matters could adversely affect our business and our stock price.
There have been efforts in recent years aimed at the investment community, including investment advisors, sovereign wealth funds, public pension funds, universities, and other groups, to promote the divestment of shares of energy companies, as well as to pressure lenders and other financial services companies to limit or curtail activities with energy companies. As a
result, some financial intermediaries, investors, and other capital markets participants have reduced or ceased lending to, or investing in, companies that operate in industries with higher perceived environmental exposure, such as the energy industry. If divestment efforts are continued, the price of our common stock or debt securities, and our ability to access capital markets or to otherwise obtain new investment or financing, may be negatively impacted.
Members of the investment community are also increasing their focus on ESG practices and disclosures, including practices and disclosures related to GHG emissions and climate change in the energy industry in particular, and diversity and inclusion initiatives and governance standards among companies more generally. As a result, we may face increasing pressure regarding our ESG practices and disclosures. Additionally, members of the investment community may screen companies such as ours for ESG performance before investing in our common stock or debt securities or lending to us. Over the past few years there has also been an acceleration in investor demand for ESG investing opportunities, and many large institutional investors have committed to increasing the percentage of their portfolios that are allocated towards ESG-focused investments. As a result, there has been a proliferation of ESG-focused investment funds seeking ESG-oriented investment products.
If we are unable to meet the ESG standards or investment or lending criteria set by these investors and funds, we may lose investors, investors may allocate a portion of their capital away from us, our cost of capital may increase, the price of our common stock and debt securities may be negatively impacted, and our reputation may also be negatively affected.
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Small Refinery Exemption. In August 2025, the U.S. Environmental Protection Agency (“EPA”) granted our mainland refineries a combination of full (100%) and partial (50%) small refinery exemptions (“SREs”) from the Renewable Fuel Standard (the “RFS”) program for the 2019 through 2024 compliance years. As a result of our historical compliance with the RFS program, we received previously retired Renewable Identification Numbers (“RINs”) related to the 2019 through 2023 compliance years from the EPA and relieved a portion of our 2024 RVO, recording a corresponding gain of $199.5 million in Net Income on our consolidated statements of operations for the year ended December 31, 2025. This also resulted in gains of $195.9 million in Adjusted Net Income (Loss) attributable to Par Pacific stockholders and $202.6 million in Adjusted EBITDA for the year ended December 31, 2025. As of December 31, 2025, the EPA has not made a determination with respect to small refinery exemptions for the 2025 compliance year. Accordingly, our recorded RFS obligation for the year ended December 31, 2025, reflects 100% of the RFS obligation for the period with no assumption of SRE relief.
Renewable Fuels Facility Joint Venture. On July 21, 2025, we and Hawaii Renewables, LLC (“Hawaii Renewables”), entered into a definitive Equity Contribution Agreement (the “Equity Contribution Agreement”) with Alohi Renewable Energy LLC (“Alohi”), an entity owned by Mitsubishi Corporation and ENEOS Corporation, to establish Hawaii Renewables as a joint venture. The joint venture was formed for the development, construction, ownership, and operation of the renewable fuels manufacturing facility co-located with our Hawaii refinery (“Renewable Fuels Facility”).
On October 21, 2025, we completed the transaction to form the Hawaii Renewables joint venture. Following the closing of the transaction, we held a 63.5% ownership interest in Hawaii Renewables and Alohi held the remaining 36.5% ownership interest. We will operate and manage the day-to-day operations at the Renewable Fuels Facility on behalf of Hawaii Renewables and provide certain services, such as construction management services, operating and corporate services, and terminalling services, to Hawaii Renewables. In addition, at the closing of the transaction, we contributed certain assets to Hawaii Renewables and Alohi contributed $100.0 million in cash in exchange for a minority interest. In connection with the transaction, Hawaii Renewables distributed $83.0 million to Par and approximately $17.0 million of Alohi’s contribution was retained by Hawaii Renewables to fund remaining construction and initial working capital. The Renewable Fuels Facility is expected to commence operations in the first half of 2026.
Inflation. Energy prices are, among other factors, indicators of inflation, and the U.S. Federal Reserve (the “Fed”) has taken significant steps to curb inflation. After aggressively raising interest rates in early 2023 to bring down inflation, the Fed cut interest rates in 2024 and 2025 in response to positive indicators of economic growth, including easing labor market conditions and lower inflation. Interest rates decreased to a range of 3.50% to 3.75% in December 2025 from 4.25% to 4.50% in December 2024. Crude oil prices decreased in 2025 compared to 2024. Brent crude oil prices averaged $68.19 per barrel in 2025 compared to $79.86 per barrel in 2024. The U.S. retail price for regular-grade gasoline averaged $3.10 per gallon in 2025 compared to $3.30 per gallon in 2024. This decline was due, in part, to lower crude oil prices in 2025 compared to 2024, as
noted above. The decrease in crude prices in 2025 was primarily due to increased global oil inventories driven by increased production by the Organization of the Petroleum Exporting Countries (“OPEC”) in the second half of 2025. The overall energy index increased to 7.7% year over year as of December 2025. While inflation has improved relative to prior years, we do not believe that inflation has had a material effect on our business, financial condition or results of operations in 2025. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases, or price increases could lead to a decline in demand for our products, which could have a material effect on our business, financial condition, or results of operations.
Geopolitical Conflicts. Given the nature of our operations, including sourcing crude oil and feedstocks, geopolitical conflicts may affect our business and results of operations. The Russia-Ukraine war, the Israel-Palestine conflict, the political activity in Venezuela, Houthi-related disruptions in the Red Sea, and tensions involving Iran and the Strait of Hormuz have all continued to disrupt global trade patterns, increase crude oil price volatility, and, at times, increase freight costs and delivery times. Sanctions, price caps, and related restrictions on Russian crude oil and petroleum products, as well as evolving U.S. sanctions and licensing regimes affecting Venezuela’s petroleum sector, have further reshaped crude and refined product trade patterns, which may indirectly affect our business through changes in the availability and pricing of crude oil and feedstocks, and increased volatility in refining margins. Further escalation, renewed maritime disruptions, or additional sanctions could adversely affect our supply economics, operating costs, and results of operations.
Tariffs. Effective August 1, 2025, the U.S. adopted new and increased tariffs on countries and specific goods, subject to evolving exemptions. In October 2025, the U.S. government announced a series of new and expanded tariffs on imports from China and other countries, including a 100% tariff on certain categories of goods and increased duties. On November 1, 2025, the U.S. government announced a deal with China that retained heightened reciprocal tariffs and suspended (retaining a 10% baseline) and reduced certain China-specific tariffs, effective November 10, 2025. Separately, previously announced tariffs on imports from other countries went into effect on November 1, 2025. In January 2026, the U.S. government announced that an additional 25% tariff would be imposed on countries purchasing Iranian oil. On February 20, 2026, the U.S Supreme Court ruled that the International Emergency Powers Act (“IEEPA”) does not authorize presidential tariff actions and invalidated prior IEEPA-based global duties. In response, the U.S. government imposed a temporary 10% global tariff under Section 122 of the Trade Act of 1974 that was increased to 15% prior to becoming effective on February 24, 2026. Those policies, along with retaliatory actions by some trading partners, increased US-China trade tensions, and ongoing negotiations around trade policy, have led to increased volatility, upward pressure on prices of a wide range of goods, and unpredictability for global trade.
We continue to actively monitor the impact of these and other global situations on our people, operations, financial condition, liquidity, suppliers, customers, and industry, and are actively responding to the impacts that these matters have on our business. Please read “Item 1A. — Risk Factors” for more information on risks and uncertainties, including those related to economic factors, and their potential impacts on our business.
For purposes of this section, “legacy portfolio” and “legacy refining operations” refer to our Hawaii, Wyoming, and Washington refineries, and exclude our Montana refinery acquired in June 2023.
Results of Operations
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
Net Income (Loss) Attributable to Par Pacific Stockholders. Our financial results for the year ended December 31, 2025, improved from net loss attributable to Par Pacific stockholders of $33.3 million for the year ended December 31, 2024, to net income attributable to Par Pacific stockholders of $369.4 million for the year ended December 31, 2025. The increase was driven by a $469.6 million increase in refining segment operating income, a $23.6 million increase in equity earnings from Laramie Energy, LLC, a $10.3 million decrease in general and administrative expenses, and a $9.9 million increase in retail segment operating income, partially offset by a $116.5 million increase in income tax expense. Please read the discussions of segment and consolidated results below for additional information.
Adjusted EBITDA and Adjusted Net Income Attributable to Par Pacific Stockholders. For the year ended December 31, 2025, Adjusted EBITDA was $633.5 million compared to $238.7 million for the year ended December 31, 2024. The $394.8 million improvement was primarily related to a $382.3 million increase in our refining segment Adjusted Gross Margin and an $11.8 million increase in our logistics segment Adjusted Gross Margin. Please read the discussion of Adjusted Gross Margin by Segment and the Discussion of Consolidated Results below for additional information.
For the year ended December 31, 2025, Adjusted Net Income attributable to Par Pacific stockholders was $390.1 million compared to $21.2 million for the year ended December 31, 2024. The $368.9 million improvement was primarily related to the same factors described above for the increase in Adjusted EBITDA, partially offset by a $12.7 million increase in
income tax expense, net of impacts due to changes in the valuation allowance and other deferred tax items, and a $12.7 million increase in D&A.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
Net Income (Loss) Attributable to Par Pacific Stockholders. Our financial results for the year ended December 31, 2024, declined from net income attributable to Par Pacific stockholders of $728.6 million for the year ended December 31, 2023, to net loss attributable to Par Pacific stockholders of $33.3 million for the year ended December 31, 2024. The decrease was driven by a $658.8 million decrease in refining segment Operating income, a $109.6 million decrease in Income tax benefit, a $25.3 million decrease in Equity earnings from Laramie Energy, LLC, and a $17.4 million increase in general and administrative expenses, partially offset by a $19.7 million increase in logistics segment Operating income, a $17.5 million decrease in Debt extinguishment and commitment costs, and a $17.4 million decrease in Acquisition and integration costs related to our Billings Acquisition. Please read the discussions of segment and consolidated results below for additional information.
Adjusted EBITDA and Adjusted Net Income Attributable to Par Pacific Stockholders. For the year ended December 31, 2024, Adjusted EBITDA was $238.7 million compared to $696.2 million for the year ended December 31, 2023. The decrease was primarily related to a $376.7 million decrease in our refining segment Adjusted Gross Margin and a $98.7 million increase in operating expenses, partially offset by increases of $14.6 million and $9.4 million in our logistics and retail segment Adjusted Gross Margins, respectively. Please read the discussion of Adjusted Gross Margin by Segment and the Discussion of Consolidated Results below for additional information.
For the year ended December 31, 2024, Adjusted Net Income attributable to Par Pacific stockholders was $21.2 million compared to $501.2 million for the year ended December 31, 2023. The decline was primarily related to the same factors described above for the decrease in Adjusted EBITDA, as well as a $12.0 million increase in interest expense and financing costs, excluding unrealized interest rate derivative losses (gains), an $11.8 million increase in Depreciation and amortization, and a $9.2 million decrease in cash distributions received from Laramie Energy, LLC, partially offset by a decrease in Income tax expense, net of impacts due to changes in the valuation allowance and other deferred tax items of $13.3 million.
The following table summarizes our consolidated results of operations for the years ended December 31, 2025, 2024, and 2023 (in thousands). The following should be read in conjunction with our consolidated financial statements under Item 8 of this Annual Report on Form 10-K.
Year Ended December 31,
Revenues
Cost of revenues (excluding depreciation)
Operating expense (excluding depreciation)
Depreciation and amortization
General and administrative expense (excluding depreciation)
Equity earnings from refining and logistics investments
Acquisition and integration costs
Par West redevelopment and other costs
Other operating loss (gain), net
Total operating expenses
Operating income
Other income (expense)
Interest expense and financing costs, net
Debt extinguishment and commitment costs
Other expense, net
Equity earnings (losses) from Laramie Energy, LLC
Total other expense, net
Income (loss) before income taxes
Income tax benefit (expense)
Net income (loss)
Less:
Net loss attributable to noncontrolling interest
Net income (loss) attributable to Par Pacific stockholders
The following tables summarize our Operating income (loss) by segment for the years ended December 31, 2025, 2024, and 2023 (in thousands). The following should be read in conjunction with our consolidated financial statements under Item 8 of this Annual Report on Form 10-K.
Year Ended December 31, 2025
Refining
Logistics (1)
Retail
Corporate, Eliminations and Other (2)
Total
Revenues
Cost of revenues (excluding depreciation)
Operating expense (excluding depreciation)
Depreciation and amortization
General and administrative expense (excluding depreciation)
Equity earnings from refining and logistics investments
Acquisition and integration costs
Par West redevelopment and other costs
Other operating loss (gain), net
Operating income (loss)
Year Ended December 31, 2024
Refining
Logistics (1)
Retail
Corporate, Eliminations and Other (2)
Total
Revenues
Cost of revenues (excluding depreciation)
Operating expense (excluding depreciation)
Depreciation and amortization
General and administrative expense (excluding depreciation)
Equity earnings from refining and logistics investments
Acquisition and integration costs
Par West redevelopment and other costs
Other operating loss (gain), net
Operating income (loss)
For the year ended December 31, 2023
Refining
Logistics (1)
Retail
Corporate, Eliminations and Other (2)
Total
Revenues
Cost of revenues (excluding depreciation)
Operating expense (excluding depreciation)
Depreciation and amortization
General and administrative expense (excluding depreciation)
Equity earnings from refining and logistics investments
Acquisition and integration costs
Par West redevelopment and other costs
Other operating loss (gain), net
Operating income (loss)
(1) Our logistics operations consist primarily of intercompany transactions which eliminate on a consolidated basis.
(2) Includes eliminations of intersegment Revenues and Cost of revenues (excluding depreciation) of $616.7 million, $643.7 million, and $590.8 million for the years ended December 31, 2025, 2024, and 2023, respectively.
Below is a summary of key operating statistics for the refining segment for the years ended December 31, 2025, 2024, and 2023:
Year Ended December 31,
Total Refining Segment
Feedstocks Throughput (Mbpd) (1)
Refined product sales volume (Mbpd) (1)
Adjusted Gross Margin per bbl ($/throughput bbl) (2)
SRE impact
Adjusted Gross Margin excluding SRE impact
Production costs per bbl ($/throughput bbl) (3)
D&A per bbl ($/throughput bbl)
Hawaii Refinery
Feedstocks Throughput (Mbpd)
Yield (% of total throughput)
Gasoline and gasoline blendstocks
Distillates
Fuel oils
Other products
Total yield
Refined product sales volume (Mbpd)
Adjusted Gross Margin per bbl ($/throughput bbl) (2)
SRE impact
Adjusted Gross Margin excluding SRE impact
Production costs per bbl ($/throughput bbl) (3)
D&A per bbl ($/throughput bbl)
Montana Refinery
Feedstocks Throughput (Mbpd) (1)
Yield (% of total throughput)
Gasoline and gasoline blendstocks
Distillates
Asphalt
Other products
Total yield
Refined product sales volume (Mbpd) (1)
Year Ended December 31,
Adjusted Gross Margin per bbl ($/throughput bbl) (2)
SRE impact
Adjusted Gross Margin excluding SRE impact
Production costs per bbl ($/throughput bbl) (3)
D&A per bbl ($/throughput bbl)
Washington Refinery
Feedstocks Throughput (Mbpd)
Yield (% of total throughput)
Gasoline and gasoline blendstocks
Distillates
Asphalt
Other products
Total yield
Refined product sales volume (Mbpd)
Adjusted Gross Margin per bbl ($/throughput bbl) (2)
SRE impact
Adjusted Gross Margin excluding SRE impact
Production costs per bbl ($/throughput bbl) (3)
D&A per bbl ($/throughput bbl)
Wyoming Refinery
Feedstocks Throughput (Mbpd)
Yield (% of total throughput)
Gasoline and gasoline blendstocks
Distillates
Fuel oil
Other products
Total yield
Refined product sales volume (Mbpd)
Adjusted Gross Margin per bbl ($/throughput bbl) (2)
SRE impact
Adjusted Gross Margin excluding SRE impact
Production costs per bbl ($/throughput bbl) (3)
D&A per bbl ($/throughput bbl)
Year Ended December 31,
Market Indices (average $ per barrel)
Hawaii Index (4)
Montana Index (5)
Washington Index (6)
Wyoming Index (7)
Combined Index (8)
Market Cracks (average $ per barrel)
Singapore 3.1.2 Product Crack (4)
Montana 6.3.2.1 Product Crack (5)
Washington 3.1.1.1 Product Crack (6)
Wyoming 2.1.1 Product Crack (7)
Crude Oil Prices (average $ per barrel) (9)
Brent
WTI
ANS (-) Brent
Bakken Guernsey (-) WTI
Bakken Williston (-) WTI
WCS Hardisty (-) WTI
MSW (-) WTI
Syncrude (-) WTI
Brent M1-M3
(1) The 2025 and 2024 amounts for the total refining segment represent the sum of the Hawaii, Montana, Washington, and Wyoming refineries’ throughput or sales volumes averaged over the year ended December 31, 2025 and 2024, respectively. Feedstocks throughput and sales volumes per day for the Montana refinery for the year ended December 31, 2023, are calculated based on the 214-day period for which we owned the Montana refinery in 2023. As such, the amounts for the total refining segment represent the sum of the Hawaii, Washington, and Wyoming refineries’ throughput or sales volumes averaged over the year ended December 31, 2023, plus the Montana refinery’s throughput or sales volumes averaged over the period from June 1, 2023, to December 31, 2023.
(2) 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. Total Refining Segment Adjusted Gross Margin per barrel is presented net of intercompany profit in inventory per barrel, which represents margin on intercompany sales where the inventory remains on our consolidated balance sheet at period end. Intercompany profit in inventory per barrel for the years ended December 31, 2025, 2024, and 2023 was immaterial. For the year ended December 31, 2025, Adjusted Gross Margin per barrel includes the SRE impact related to the 2019 through 2024 compliance years.
(3) 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 consolidated statements of operations, which also includes costs related to our bulk marketing operations and severance costs.
(4) Beginning in 2025, we established the Hawaii Index as a new benchmark for our Hawaii operations. We believe the Hawaii Index, which incorporates market cracks and landed crude differentials, better reflects the key drivers impacting our Hawaii refinery’s financial performance compared to prior reported market indices. The Hawaii Index is calculated as the Singapore 3.1.2 Product Crack, or one part gasoline (RON 92) and two parts distillates (Sing Jet & Sing gasoil) as created from a barrel of Brent crude oil, less the Par Hawaii Refining, LLC (“PHR”) crude differential.
(5) Beginning in 2025, we established the Montana Index as a new benchmark for our Montana refinery. We believe the Montana Index, which incorporates local market cracks, regional crude oil prices, and management’s estimates for other costs of sales, better reflects the key drivers impacting our Montana refinery’s financial performance compared to prior reported market indices. Beginning in 2025, market cracks have been updated to reflect local market product pricing, which better reflects our Montana refinery’s refined product sales price compared to prior reported market indices. The Montana Index is calculated as the Montana 6.3.2.1 Product Crack less Montana crude costs, less other costs of sales, including inflation-adjusted product delivery costs, yield loss expense, taxes and tariffs, and product discounts. The Montana 6.3.2.1 Product Crack is calculated by taking three parts gasoline (Billings E10 and Spokane E10), two parts distillate (Billings ULSD and Spokane ULSD), and one part asphalt (Rocky Mountain Rail Asphalt) as created from a barrel of WTI crude oil, less 100% of the RVO cost for gasoline and ULSD. Asphalt pricing is lagged by one month. The Montana crude cost is calculated as 60% WCS differential to WTI, 20% MSW differential to WTI, and 20% Syncrude differential to WTI. The Montana crude cost is lagged by three months and includes an inflation-adjusted crude delivery cost. Other costs of sales and crude delivery costs are based on historical averages and management’s estimates.
(6) Beginning in 2025, we established the Washington Index as a new benchmark for our Washington refinery. We believe the Washington Index, which incorporates local market cracks, regional crude oil prices, and management’s estimates for other costs of sales, better reflects the key drivers impacting our Washington refinery’s financial performance compared to prior reported market indices. Beginning in 2025, market cracks have been updated to reflect local market product pricing, which better reflects our Washington refinery’s refined product sales price compared to prior reported market indices. The Washington Index is calculated as the Washington 3.1.1.1 Product Crack, less Washington crude costs, less other costs of sales, including inflation-adjusted product delivery costs, yield loss expense and state and local taxes. The Washington 3.1.1.1 Product Crack is calculated by taking one part gasoline (Tacoma E10), one part distillate (Tacoma ULSD) and one part secondary products (USGC VGO and Rocky Mountain Rail Asphalt) as created from a barrel of WTI crude oil, less 100% of the RVO cost for gasoline and ULSD. Asphalt pricing is lagged by one month. The Washington crude cost is calculated as 67% Bakken Williston differential to WTI and 33% WCS Hardisty differential to WTI. The Washington crude cost is lagged by one month and includes an inflation-adjusted crude delivery cost. Other costs of sales and crude delivery costs are based on historical averages and management’s estimates.
(7) Beginning in 2025, we established the Wyoming Index as a new benchmark for our Wyoming refinery. We believe the Wyoming Index, which incorporates local market cracks, regional crude oil prices, and management’s estimates for other costs of sales, better reflects the key drivers impacting our Wyoming refinery’s financial performance compared to prior reported market indices. Beginning in 2025, market cracks have also been updated to reflect local market product pricing, which better reflects our Wyoming refinery’s refined product sales price compared to prior reported market indices. The Wyoming Index is calculated as the Wyoming 2.1.1 Product Crack, less Wyoming crude costs, less other cost of sales, including inflation adjusted product delivery costs and yield loss expense, based on historical averages and management’s estimates. The Wyoming 2.1.1 Product Crack is calculated by taking one part gasoline (Rockies gasoline) and one part distillate (USGC ULSD and USGC Jet) as created from a barrel of WTI crude oil, less 100% of the RVO cost for gasoline and ULSD. The Wyoming crude cost is calculated as the Bakken Guernsey differential to WTI on a one-month lag.
(8) Beginning in 2025, we established the Combined Index as a new benchmark for our refining segment. The Combined Index provides a wholistic view of key drivers impacting our refining segment’s financial performance and is calculated as the throughput-weighted average of each regional index for periods under our ownership. As such, the throughput weighted index contemplates the Montana index following June 1, 2023.
(9) Beginning in 2025, crude oil prices have been updated and expanded to reflect regional differentials to Brent and WTI, which better reflect our refineries’ feedstock costs compared to prior crude oil pricing.
Below is a summary of key operating statistics for the retail segment for the years ended December 31, 2025, 2024, and 2023:
Year Ended December 31,
Retail Segment
Retail sales volumes (thousands of gallons)
Non-GAAP Performance Measures
Management uses certain financial measures and forecasts to evaluate our operating performance and allocate resources that are considered non-GAAP financial measures. The chief operating decision-maker (“CODM”) is the Chief Executive Officer (“CEO”), who uses certain non-GAAP financial measures and forecasts to allocate resources and evaluate our operating performance. These measures should not be considered in isolation or as substitutes or alternatives to their most directly comparable GAAP financial measures or any other measure of financial performance or liquidity presented in accordance with GAAP. These non-GAAP measures may not be comparable to similarly titled measures used by other companies since each company may define these terms differently.
We believe Adjusted Gross Margin (as defined below) 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 and amortization. Operating expense includes certain shared costs such as finance, accounting, tax, human resources, information technology, and legal costs that are not directly attributable to specific operating segments. The criteria used to determine the allocation of these expenses generally reflect the time and resources required to provide the applicable service to other internal stakeholders. Remaining expenses are included in the reconciliation of reportable segment Adjusted EBITDA to consolidated pre-tax income (loss) as unallocated corporate general and administrative expenses.
Management, including the CODM, uses Adjusted Gross Margin per barrel to evaluate operating performance and compare profitability to other companies in the industry and to industry benchmarks. We believe Adjusted Net Income (Loss) attributable to Par Pacific stockholders, Adjusted EBITDA (as defined below), and Adjusted EBITDA by segment (as defined below) are useful supplemental financial measures that allow management and 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 our operating performance and return on invested capital as compared to other companies without regard to financing methods and capital structure.
Beginning with financial results reported for the second quarter of 2023, Adjusted Gross Margin, Adjusted Net Income (Loss) attributable to Par Pacific stockholders, and Adjusted EBITDA exclude our portion of interest, taxes, and depreciation expense from our refining and logistics investments acquired on June 1, 2023, as part of the Billings Acquisition.
Beginning with financial results reported for the fourth quarter of 2023, Adjusted Gross Margin, Adjusted Net Income (Loss) attributable to Par Pacific stockholders, and Adjusted EBITDA also exclude all hedge losses (gains) associated with our Washington ending inventory and LIFO layer increment impacts associated with our Washington inventory. In addition, we have modified our environmental obligation mark-to-market adjustment to include only the mark-to-market losses (gains) associated with our net RINs liability and net obligation associated with the Washington Climate Commitment Act (“Washington CCA”) and Clean Fuel Standard. This modification was made as part of our change in how we estimate our environmental obligation liabilities.
Beginning with financial results reported for the fourth quarter of 2023, Adjusted Net Income (Loss) attributable to Par Pacific stockholders excludes unrealized interest rate derivative losses (gains) and all Laramie Energy related impacts with the exception of cash distributions. We have recast Adjusted Net Income (Loss) attributable to Par Pacific stockholders for prior periods when reported to conform to the modified presentation. Please read “Note 2—Summary of Significant Accounting Policies”, Environmental Credits and Obligations section, for a discussion of the change in estimate.
Beginning with financial results reported for the first quarter of 2024, Adjusted Net Income (Loss) attributable to Par Pacific stockholders also excludes other non-operating income and expenses. This modification improves comparability between periods by excluding income and expenses resulting from non-operating activities.
Effective as of the fourth quarter of 2024, we have modified our definition of Adjusted Gross Margin, Adjusted Net Income (Loss) attributable to Par Pacific stockholders and Adjusted EBITDA to align the accounting treatment for deferred turnaround costs from our refining and logistics investments with our accounting policy. Under this approach, we exclude our share of their turnaround expenses, which are recorded as period costs in their financial statements, and instead defer and amortize these costs on a straight-line basis over the period estimated until the next planned turnaround. This modification enhances consistency and comparability across reporting periods.
Beginning with the financial results reported for the fourth quarter of 2025, Adjusted Net Income (Loss) attributable to Par Pacific stockholders excludes the portion of non-GAAP adjustments associated with the noncontrolling interest in our joint venture established on October 21, 2025. Adjusted Net Income (Loss) attributable to Par Pacific stockholders and Adjusted EBITDA by segment also excludes other operating gains and losses (which primarily includes the impacts of the noncash remeasurement of our environmental liabilities). This modification improves comparability between periods by excluding non-cash gains and losses that do not reflect ongoing underlying business operations.
Beginning with the financial results reported for the fourth quarter of 2025, Adjusted EBITDA includes the Adjusted Net Loss attributable to noncontrolling interests associated with our joint venture established on October 21, 2025.
Adjusted Gross Margin
Adjusted Gross Margin is defined as Operating income (loss) excluding:
• operating expense (excluding depreciation);
• depreciation and amortization (“D&A”);
• Par’s portion of interest, taxes, and D&A expense from refining and logistics investments;
• impairment expense;
• other operating (gain) loss, net (which primarily includes the impacts of the noncash remeasurement of our environmental liabilities);
• Par's portion of accounting policy differences from refining and logistics investments;
• 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, hedge losses (gains) associated with our Washington ending inventory and intermediation obligation, purchase price allocation adjustments, and LIFO layer increment and decrement impacts associated with our Washington inventory);
• Environmental obligation mark-to-market adjustment (which represents the mark-to-market losses (gains) associated with our net RINs liability and our net obligation associated with the Washington Climate Commitment Act and Clean Fuel Standard); and
• unrealized loss (gain) on derivatives.
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):
Year ended December 31, 2025
Refining
Logistics
Retail
Operating Income
Operating expense (excluding depreciation)
Depreciation, depletion, and amortization
Par’s portion of interest, taxes, and depreciation and amortization expense from refining and logistics investments
(1) For the years ended December 31, 2025, 2024, and 2023, there was no impairment expense.
(2) For the year ended December 31, 2023, there was no impact in Operating Income from accounting policy differences at our refining and logistics investments.
Adjusted Net Income (Loss) Attributable to Par Pacific Stockholders and Adjusted EBITDA
Adjusted Net Income (Loss) attributable to Par Pacific stockholders is defined as Net income (loss) attributable to Par Pacific stockholders excluding:
• 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, hedge losses (gains) associated with our Washington ending inventory and intermediation obligation, purchase price allocation adjustments, and LIFO layer increment and decrement impacts associated with our Washington inventory);
• Environmental obligation mark-to-market adjustments (which represents the mark-to-market losses (gains) associated with our RINs and Washington CCA and Clean Fuel Standard);
• unrealized (gain) loss on derivatives;
• acquisition and integration costs;
• redevelopment and other costs related to Par West;
• debt extinguishment and commitment costs;
• increase in (release of) tax valuation allowance and other deferred tax items;
• changes in the value of contingent consideration and common stock warrants;
• severance costs and other non-operating expense (income);
• impairment expense;
• impairment expense associated with our investment in Laramie Energy;
• Par’s share of equity (earnings) losses from Laramie Energy, LLC, excluding cash distributions;
• Par’s portion of accounting policy differences from refining and logistics investments;
• other operating (gain) loss, net (which primarily included the impacts of the noncash remeasurement of our environmental liabilities); and
• Noncontrolling interest impact of non-GAAP adjustments.
Adjusted EBITDA is defined as Adjusted Net Income (Loss) attributable to Par Pacific stockholders plus Adjusted Net Loss attributable to noncontrolling interests excluding:
• interest expense and financing costs, net, excluding interest rate derivative loss (gain);
• cash distributions from Laramie Energy, LLC to Par;
• Par's portion of interest, taxes, and D&A expense from refining and logistics investments; and
• income tax expense (benefit) excluding the increase in (release of) tax valuation allowance.
The following table presents a reconciliation of Adjusted Net Income (Loss) attributable to Par Pacific stockholders and Adjusted EBITDA to the most directly comparable GAAP financial measure, Net income (loss) attributable to Par Pacific stockholders, on a historical basis for the periods indicated (in thousands):
Year Ended December 31,
Net income (loss) attributable to Par Pacific stockholders
Changes in valuation allowance and other deferred tax items (1)
Severance costs and other non-operating expense (2)
Equity (earnings) losses from Laramie Energy, LLC, excluding cash distributions
Par's portion of accounting policy differences from refining and logistics investments
Other operating loss (gain), net
Noncontrolling interest impact of non-GAAP adjustments
Adjusted Net Income attributable to Par Pacific stockholders (3) (4)
Adjusted Net Loss attributable to noncontrolling interests
Depreciation, depletion, and amortization
Interest expense and financing costs, net, excluding unrealized interest rate derivative loss (gain)
Laramie Energy, LLC cash distributions to Par
Par's portion of interest, taxes, and depreciation and amortization expense from refining and logistics investments
Income tax expense (benefit)
Adjusted EBITDA (3)
(1) For the year ended December 31, 2025, we recognized a non-cash deferred tax expense of $100.4 million. For the years ended December 31, 2024 and 2023, we recognized non-cash deferred tax benefits of $3.3 million and $126.2 million, respectively. These tax impacts are included in Income tax benefit (expense) on our consolidated statements of operations.
(2) For the years ended December 31, 2025 and 2024, we incurred $0.8 million and $13.1 million of stock-based compensation expenses associated with equity awards modifications, respectively. For the year ended December 31, 2024, we incurred $0.8 million for a legal settlement unrelated to current operating activities.
(3) For the years ended December 31, 2025, 2024, and 2023, there was no change in value of contingent consideration, change in value of common stock warrants, impairment expense, impairments associated with our investment in Laramie Energy, or our share of Laramie Energy’s asset impairmentlosses in excess of our basis difference.
(4) For the year ended December 31, 2023, there was no impact in Net Income (Loss) from accounting policy differences at our refining and logistics investments.
Adjusted EBITDA by Segment
Adjusted EBITDA by segment is defined as Operating income (loss) excluding:
• 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, hedge losses (gains) associated with our Washington ending inventory and intermediation obligation, purchase price allocation adjustments, and LIFO layer increment and decrement impacts associated with our Washington inventory);
• Environmental obligation mark-to-market adjustments (which represents the mark-to-market losses (gains) associated with our net RINs liability and net obligation associated with the Washington CCA and Clean Fuel Standard);
• unrealized (gain) loss on derivatives;
• acquisition and integration costs;
• redevelopment and other costs related to Par West;
• severance costs and other non-operating expense (income);
• other operating loss (gain), net (which primarily includes the impacts of the noncash remeasurement of our environmental liabilities);
• impairment expense;
• Par's portion of interest, taxes, and D&A expense from refining and logistics investments; and
• Par's portion of accounting policy differences from refining and logistics investments.
Adjusted EBITDA by segment also includes Gain on curtailment of pension obligation and Other income (loss), net, which are presented below Operating income (loss) on our consolidated statements of operations.
The following table presents a reconciliation of Adjusted EBITDA by segment to the most directly comparable GAAP financial measure, Operating income (loss) by segment, on a historical basis, for our operating segments, for the periods indicated (in thousands):
Par's portion of interest, taxes, and depreciation and amortization expense from refining and logistics investments
Other loss, net
Adjusted EBITDA (1) (2)
(1) For the years ended December 31, 2025, 2024, and 2023, there was no change in value of contingent consideration, change in value of common stock warrants, impairment expense, impairments associated with our investment in Laramie Energy, or our share of Laramie Energy’s asset impairmentlosses in excess of our basis difference. Please read the Non-GAAP Performance Measures discussion above for information regarding changes to the components of Adjusted EBITDA made during 2025.
(2) For the year ended December 31, 2023, there was no impact in Operating Income from accounting policy differences at our refining and logistics investments.
Discussion of Operating Income by Segment
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
Refining. Operating income for our refining segment was $487.0 million for the year ended December 31, 2025, an increase of $469.6 million compared to $17.4 million for the year ended December 31, 2024. The increase in operating income was primarily driven by:
an increase of $241.2 million related to higher crack spreads across all our refineries,
an SRE benefit of $199.5 million at our Washington, Montana, and Wyoming refineries,
an increase of $79.8 million related favorable derivative impacts,
a favorable change in the valuation of the embedded derivatives related to our Inventory Intermediation Agreement driven by changes in commodity prices that resulted in a decrease of $33.0 million, and
a favorable change in other drivers of $56.9 million,
partially offset by:
an increase of $98.4 million of environmental compliance cost related to current period production and
an increase of $37.2 million driven by unfavorable feedstock differentials and purchased product costs.
Logistics. Operating income for our logistics segment was $97.6 million for the year ended December 31, 2025, an increase of $8.2 million compared to $89.4 million for the year ended December 31, 2024. The increase was primarily due to decreases of $11.2 million in repair and maintenance costs, $6.6 million in environmental expenses, and $5.7 million in other expenses, and an increase of $4.0 million in third party revenue. These improvements were partially offset by an $11.8 million in rent expense, $5.5 million related to lower throughput, and $4.1 million of reduced gross margin related to the Wyoming refinery incident in the first half of the year. Other impacts include a $1.5 million decrease in losses on sale and a $1.0 million decrease in depreciation and amortization.
Retail. Operating income for our retail segment was $74.7 million for the year ended December 31, 2025, an increase of $9.9 million compared to $64.8 million for the year ended December 31, 2024. The increase in operating income was primarily due to a $2.0 million increase driven by 1% higher fuel sales volumes, a $1.9 million increase in merchandise margins, a $1.7 million increase related to a 2% increase in fuel margins, and a $1.7 million decrease in repairs and maintenance costs. Other impacts include a $0.7 million decrease in employee expenses, a $0.7 million decrease in other operating costs and a $0.6 million decrease in outside services expenses.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
Refining. Operating income for our refining segment was $17.4 million for the year ended December 31, 2024, a decrease of $658.8 million compared to $676.2 million for the year ended December 31, 2023. The decrease in operating income was primarily driven by:
• a decrease of $532.5 million related to declining crack spreads at refineries in our legacy portfolio,
• a decrease of $134.7 million in environmental credit and related obligations income across refineries in our legacy portfolio, primarily associated with RIN settlement gains recorded in 2023 with no similar gains in 2024, and
• a decrease of $38.8 million driven by a 1% decrease in refined product sales volumes at our refineries in our legacy portfolio,
partially offset by:
• an increase of $58.3 million related to a favorable change in crude oil differentials at refineries in our legacy portfolio, and
• a favorable impact of $20.8 million related to our derivatives in Hawaii and Washington.
Logistics. Operating income for our logistics segment was $89.4 million for the year ended December 31, 2024, an increase of $19.7 million compared to $69.7 million for the year ended December 31, 2023. The increase was primarily due to a $16.2 million contribution from the Billings Acquisition logistics assets acquired in June 2023. Excluding the contribution from the Billings Acquisition, the increase in operating income was driven by lower repair and maintenance costs of $3.4 million in our legacy portfolio.
Retail. Operating income for our retail segment was $64.8 million for the year ended December 31, 2024, an increase of $8.2 million compared to $56.6 million for the year ended December 31, 2023. The increase in operating income was primarily driven by an increase of $4.6 million related to higher fuel margins, $3.4 million related to higher merchandise sales, and $1.1 million reflecting higher fuel sales volumes, partially offset by $1.3 million of higher operating expenses driven by increases in employee costs during the year ended December 31, 2024, compared to the year ended December 31, 2023.
Discussion of Adjusted Gross Margin by Segment
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
Refining . For the year ended December 31, 2025, our refining Adjusted Gross Margin was approximately $1.0 billion, an increase of $382.3 million compared to $618.3 million for the year ended December 31, 2024. The increase in profitability was primarily due to a $238.7 million benefit related to improved crack spreads, an SRE benefit of $202.6 million, and other factors as described below.
• Adjusted Gross Margin for the Washington refinery increased by $10.44 per barrel from $3.25 per barrel during the year ended December 31, 2024, to $13.69 per barrel, including an SRE impact of $5.27 per barrel, during the year ended December 31, 2025. The increase was primarily due to higher crack spreads, an SRE benefit of $74.4 million, and a 3% increase in refined product sales volumes, partially offset by higher environmental costs related to those higher refined product sales volumes and higher feedstock costs. The Washington Index improved by $7.16 per barrel, or 173%. The Washington 3.1.1.1 Product Crack improved by $7.82 per barrel, or 65%.
• Adjusted Gross Margin for the Montana refinery increased by $4.46 per barrel from $11.37 per barrel during the year ended December 31, 2024, to $15.83 per barrel, including an SRE impact of $3.05 per barrel, during the year ended December 31, 2025. The increase was primarily due to an SRE benefit of $57.6 million, higher crack spreads, and a favorable change in realized derivatives. These improvements were partially offset by a 2% decrease in refined product sales volumes with a corresponding decrease in environmental costs. The Montana Index declined by $0.18 per barrel, or 1%. The Montana 6.3.2.1 Product Crack improved by $2.90 per barrel, or 13%.
• Adjusted Gross Margin for the Hawaii refinery increased by $2.35 per barrel from $9.34 per barrel during the year ended December 31, 2024, to $11.69 per barrel during the year ended December 31, 2025. The increase was primarily
due to lower purchased product costs, higher crack spreads, higher yields, and lower other inventory financing cost partially offset by unfavorable changes in feedstock differentials and an unfavorable change in realized derivatives. The Hawaii Index improved by $3.39 per barrel, or 47%. The Singapore 3.1.2 Product Crack improved by $2.77 per barrel, or 21%.
• Adjusted Gross Margin for the Wyoming refinery increased by $17.20 per barrel from $13.73 per barrel during the year ended December 31, 2024, to $30.93 per barrel, including an SRE impact of $14.52 per barrel, during the year ended December 31, 2025. The increase was primarily driven by an SRE benefit of $70.5 million and higher crack spreads, partially offset by higher feedstock costs and a 9% decrease in refined product sales volumes. The Wyoming Index improved by $3.52 per barrel, or 21%. The Wyoming 2.1.1 Product Crack improved by $3.41 per barrel or 18%.
Logistics. For the year ended December 31, 2025, our logistics Adjusted Gross Margin was approximately $147.6 million, an increase of $11.8 million compared to $135.8 million for the year ended December 31, 2024. The increase was primarily due to a $7.3 million decrease in repair and maintenance costs, a $9.4 million decrease in other expenses, and a $3.1 million decrease in environment expenses, partially offset by a $5.5 million decrease related to lower throughput, a $4.1 million decrease related to the Wyoming refinery incident in the first half of the year, and $2.3 million related to higher rent expense.
Retail. For the year ended December 31, 2025, our retail Adjusted Gross Margin was approximately $170.4 million, an increase of $5.7 million compared to $164.7 million for the year ended December 31, 2024. The increase was primarily due to a 1% increase in sales volumes, a $1.9 million increase in merchandise margins, and a $1.7 million increase related to a 2% increase in fuel margins.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
Refining . For the year ended December 31, 2024, our refining Adjusted Gross Margin was approximately $618.3 million, a decrease of $376.7 million compared to $995.0 million for the year ended December 31, 2023. The decrease in profitability was primarily due to a decrease in Adjusted Gross Margin contributed by our legacy refining portfolio of $358.6 million reflecting lower crack spreads and a 1.3% decrease in refined product sales volumes, partially offset by favorable impacts from realized derivatives of $114.6 million, favorable changes in crude oil differentials at the refineries in our legacy portfolio, lower intermediation fees of $19.1 million and other factors as described below.
• Adjusted Gross Margin for the Hawaii refinery declined by $5.91 per barrel from $15.25 per barrel during the year ended December 31, 2023, to $9.34 per barrel during the year ended December 31, 2024. The decrease was primarily due to lower crack spreads, partially offset by favorable changes in realized derivatives. The Hawaii Index declined $5.85 per barrel, or 45%.
• Adjusted Gross Margin for the Washington refinery decreased by $6.16 per barrel from $9.41 per barrel during the year ended December 31, 2023, to $3.25 per barrel during the year ended December 31, 2024. The decrease was primarily due to lower crack spreads and a 6% decrease in refined product sales volumes, partially offset by lower environmental costs, and favorable changes in crude oil differentials and realized derivatives. The Washington Index declined $5.68 per barrel, or 58%.
• Adjusted Gross Margin for the Wyoming refinery decreased by $11.42 per barrel from $25.15 per barrel during the year ended December 31, 2023, to $13.73 per barrel during the year ended December 31, 2024. The decrease was primarily due to lower crack spreads, partially offset by favorable changes in crude oil differentials. The Wyoming Index declined $8.01 per barrel, or 33%.
• Adjusted Gross Margin for the Montana refinery decreased by $9.77 per barrel from $21.14 per barrel during the year ended December 31, 2023, to $11.37 per barrel during the year ended December 31, 2024. The decrease was primarily due to lower crack spreads, partially offset by higher refined product sale volumes. The Montana Index declined $9.32 per barrel, or 39%.
Logistics. For the year ended December 31, 2024, our logistics Adjusted Gross Margin was approximately $135.8 million, an increase of $14.6 million compared to $121.2 million for the year ended December 31, 2023. The increase was primarily due to a $14.7 million increased contribution from the Billings Acquisition logistics assets acquired in June 2023.
Retail. For the year ended December 31, 2024, our retail Adjusted Gross Margin was approximately $164.7 million, an increase of $9.4 million compared to $155.3 million for the year ended December 31, 2023. The increase was primarily related to a $4.1 million increase in fuel volumes and $3.5 million of increased merchandise margins.
Discussion of Consolidated Results
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
Revenues. For the year ended December 31, 2025, revenues were $7.5 billion, a $0.5 billion decrease compared to $8.0 billion for the year ended December 31, 2024. The decrease was primarily driven by $0.6 billion lower refining revenue related to lower crude oil prices, partially offset by a $0.2 billion increase related to higher average product crack spreads. The Combined Index increased 32% as compared to the prior period. Average Brent crude oil prices and average WTI crude oil prices both declined 15% compared to the prior period. Revenues at our retail segment decreased $8.1 million primarily due to a 3% decrease in fuel prices, partially offset by a 1% increase in fuel sales volumes and a 1% increase in merchandise sales. Please read our key operating statistics for further information.
Cost of Revenues (Excluding Depreciation). For the year ended December 31, 2025, cost of revenues (excluding depreciation) was $6.1 billion, a $1.0 billion decrease compared to $7.1 billion for the year ended December 31, 2024, primarily driven by the decreases in crude oil prices discussed above, an SRE benefit of $0.2 billion related to SREs granted for the 2019 through 2024 compliance years, and lower purchased product costs, partially offset by unfavorable feedstock costs.
Operating Expense (Excluding Depreciation). For the year ended December 31, 2025, operating expense (excluding depreciation) was approximately $587.7 million, which was relatively consistent with $584.3 million for the year ended December 31, 2024.
Depreciation and Amortization . For the year ended December 31, 2025, D&A expense was approximately $144.3 million, an increase of $12.7 million compared to $131.6 million for the year ended December 31, 2024. The increase was primarily driven by a $14.8 million increase in Montana primarily related to the amortization of turnaround assets and a $3.0 million increase in Wyoming driven by equipment damaged as a result of the February 2025 operational incident, partially offset by a $4.8 million decrease in D&A at our Hawaii Refinery reflecting fully amortized turnaround assets.
General and Administrative Expense (Excluding Depreciation). For the year ended December 31, 2025, General and administrative expense (excluding depreciation) was approximately $98.5 million, a decrease of $10.3 million compared to $108.8 million for the year ended December 31, 2024. The decrease was primarily due to $13.1 million of stock-based compensation expenses related to CEO transition costs in 2024 and a $7.8 million decrease in renewable project costs, partially offset by a $7.5 million increase in employee costs and a $2.2 million increase in IT expenses.
Equity Earnings from Refining and Logistics Investments. For the year ended December 31, 2025, Equity earnings from refining and logistics investments were $26.3 million, an increase of $14.4 million compared to $11.9 million for the year ended December 31, 2024. The increase was primarily due to a $13.9 million increase in our proportionate share of YELP’s net income. Please read “Note 3—Refining and Logistics Equity Investments” to our consolidated financial statements under Item 8 of this Form 10-K for additional information.
Acquisition and Integration Costs. For the year ended December 31, 2025, we incurred $4.3 million of acquisition and integration costs, primarily related to the establishment of the Hawaii Renewables joint venture. For the year ended December 31, 2024, we incurred an immaterial amount of acquisition and integration costs. Please read “Note 3—Refining and Logistics Equity Investments” to our consolidated financial statements under Item 8 of this Form 10-K for more information.
Par West Redevelopment and Other Costs. For the year ended December 31, 2025, Par West redevelopment and other costs were $14.8 million, an increase of $2.3 million compared to $12.5 million for the year ended December 31, 2024. The increase was primarily due to an increase in redevelopment activities.
Other Operating Loss (Gain), Net. For the year ended December 31, 2025, other operating gain, net was $7.2 million, primarily related to a $10.3 million decrease due to the remeasurement of Montana Refinery environmental remediation liabilities, partially offset by a $3.9 million increase due to the remeasurement of Wyoming Refinery environmental remediation liabilities. Please read “Note 19—Commitments and Contingencies” to our consolidated financial statements under Item 8 of this Form 10-K for more information. For the year ended December 31, 2024, other operating loss, net was immaterial.
Interest Expense and Financing Costs, Net . For the year ended December 31, 2025, our Interest expense and financing costs, net were approximately $82.4 million, which was relatively consistent with $82.8 million for the year ended December 31, 2024.
Debt Extinguishment and Commitment Costs. For the year ended December 31, 2025, we incurred $1.1 million of debt extinguishment and commitment costs in connection with the repricing of our Term Loan Credit Agreement. For the year ended December 31, 2024, our Debt extinguishment and commitment costs of $1.7 million were incurred in connection with the repricing of our Term Loan Credit Agreement, the termination of our LC Facility, and the expiration of our Supply and Offtake Agreement in 2024. Please read “Note 15—Debt” to our consolidated financial statements under Item 8 of this Form 10-K for further discussion.
Other Expense, Net . For the year ended December 31, 2025, other expense was $0.7 million, a decrease of $1.2 million compared to $1.9 million for the year ended December 31, 2024. The decrease was primarily due to 2024 legal expenses unrelated to operating activities with no similar 2025 expenses.
Equity earnings (losses) from Laramie Energy, LLC. For the year ended December 31, 2025, equity earnings from Laramie Energy, LLC were $23.3 million, an increase of $23.6 million compared to $0.3 million of equity losses for the year ended December 31, 2024. The increase was primarily due to a $23.6 million increase in our proportionate share of Laramie Energy’s net income. On April 29, 2024, Laramie Energy made a one-time cash distribution to its owners, including us, based on ownership percentage. Our share of this distribution was $1.5 million. Please read “Note 4—Investment in Laramie Energy” to our consolidated financial statements under Item 8 of this Form 10-K for more information.
Income Taxes. For the year ended December 31, 2025, we recorded an income tax expense of $110.8 million primarily due to a $100.4 million non-cash deferred tax expense driven by an increase in our 2025 taxable income. For the year ended December 31, 2024, we recorded an income tax benefit of $5.7 million primarily due to a $5.5 million non-cash deferred tax benefit driven by our 2024 pre-tax losses. Please read “Note 23—Income Taxes” to our consolidated financial statements under Item 8 of this Form 10-K for more information.
Net Loss Attributable to Noncontrolling Interests . For the year ended December 31, 2025, losses attributable to noncontrolling interests were $2.3 million, related to our Hawaii Renewables joint venture. Please read “Note 5—Joint Venture” and “Note 20—Stockholders’ Equity” to our consolidated financial statements under Item 8 of this Form 10-K for more information.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
Revenues. For the year ended December 31, 2024, Revenues were $8.0 billion, a $0.2 billion decrease compared to $8.2 billion for the year ended December 31, 2023. The decrease was primarily due to a $0.7 billion decrease in third-party revenues when comparing our legacy refining operations, of which $0.5 billion was related to lower average crack spreads, $0.1 billion was related to lower crude oil prices, and $0.1 billion was related to a 1% decrease in sales volumes. This decrease was partially offset by an increase of $0.5 billion in contributions from the Billings Acquisition, which closed on June 1, 2023. The Washington Index, Hawaii Index, Montana Index, and Wyoming Index declined 58%, 45%, 39%, and 33% respectively, compared to 2023. Average Brent crude oil prices declined 3% and average WTI crude oil prices declined 2% as compared to the prior period. Revenues at our retail segment decreased $7.7 million primarily due to a 6% decrease in fuel sales prices, partially offset by a 3% increase in sales volumes and a 5% increase in merchandise sales.
Cost of Revenues (Excluding Depreciation). For the year ended December 31, 2024, Cost of revenues (excluding depreciation) was $7.1 billion, a $0.3 billion increase compared to $6.8 billion for the year ended December 31, 2023, primarily driven by an additional $0.5 billion in contributions related to a full year of results from our Billings assets, partially offset by decreases in crude oil prices at our legacy refining locations as discussed above.
Operating Expense (Excluding Depreciation). For the year ended December 31, 2024, operating expense (excluding depreciation) was approximately $584.3 million, an increase of $98.7 million compared to $485.6 million for the year ended December 31, 2023. The increase was primarily driven by a $96.2 million increase in expense from the Billings Acquisition.
Depreciation and Amortization . For the year ended December 31, 2024, D&A expense was approximately $131.6 million, an increase of $11.8 million compared to $119.8 million for the year ended December 31, 2023. The increase was primarily driven by $18.4 million of additional D&A attributable to the Billings Acquisition, partially offset by a $6.3 million decrease in D&A from our Hawaii Refinery reflecting fully depreciated assets in the second half of 2023 and the second quarter of 2024.
General and Administrative Expense (Excluding Depreciation). For the year ended December 31, 2024, general and administrative expense (excluding depreciation) was approximately $108.8 million, an increase of $17.4 million compared to $91.4 million for the year ended December 31, 2023. The increase was primarily due to $13.1 million of stock-based
compensation expenses related to CEO transition costs in the first quarter of 2024, a $3.1 million increase in IT expenses, and a $2.1 million increase in employee costs.
Equity earnings from refining and logistics investments. For the year ended December 31, 2024, equity earnings from refining and logistics investments were $11.9 million, which was relatively consistent with $11.8 million for the year December 31, 2023. Please read “Note 3—Refining and Logistics Equity Investments” to our consolidated financial statements under Item 8 of this Form 10-K for additional information.
Acquisition and Integration Costs. For the year ended December 31, 2024, we incurred an immaterial amount of acquisition and integration costs. For the year ended December 31, 2023, we incurred $17.5 million of acquisition and integration costs related to the Billings Acquisition, which closed on June 1, 2023. Please read “Note 6—Acquisitions” to our consolidated financial statements under Item 8 of this Form 10-K for more information.
Par West redevelopment and other costs. For the year ended December 31, 2024, Par West redevelopment and other costs were $12.5 million, an increase of $1.1 million compared to $11.4 million for the year ended December 31, 2023, associated with the operation and decommissioning of our Par West facility. Increased redevelopment activity was the primary driver of the increase in costs.
Interest Expense and Financing Costs, Net . For the year ended December 31, 2024, our interest expense and financing costs, net were approximately $82.8 million, an increase of $10.3 million compared to $72.5 million for the year ended December 31, 2023. $15.8 million of the increase in interest expense and financing costs, primarily related to higher ABL Credit Facility and Term Loan B Facility balances in 2024, and a $7.1 million decrease in interest income from our investment accounts. This activity was partially offset by a $12.8 million net decrease in inventory financing costs related to the refinancing of our inventory financing agreements in 2023 and 2024. Please read “Note 13—Inventory Financing Agreements” and “Note 15—Debt” to our consolidated financial statements under Item 8 of this Form 10-K for further discussion on our inventory financing and indebtedness, respectively.
Debt extinguishment and commitment costs. For the year ended December 31, 2024, our debt extinguishment and commitment costs were approximately $1.7 million in connection with the repricing of our Term Loan Credit Agreement, the termination of our LC Facility and the expiration of our Supply and Offtake Agreement in the second quarter of 2024. For the year ended December 31, 2023, our debt extinguishment and commitment costs were approximately $19.2 million in connection with the refinancing of our long-term debt in the first quarter of 2023 and the termination of the Washington Refinery Intermediation Agreement in the fourth quarter of 2023. Please read “Note 15—Debt” to our consolidated financial statements under Item 8 of this Form 10-K for further discussion.
Other expense, net. For the year ended December 31, 2024, other expense was $1.9 million, an increase of $1.8 million compared to $0.1 million for the year ended December 31, 2023. 2024 activity was primarily due to $0.8 million of 2024 legal expenses unrelated to operating activities with no similar 2023 activity.
Equity earnings (losses) from Laramie Energy, LLC. For the year ended December 31, 2024, equity losses from Laramie Energy, LLC were $0.3 million compared to $25.0 million of equity earnings for the year ended December 31, 2023. For the year ended December 31, 2024, our proportionate share of Laramie Energy’s net loss was $6.8 million, partially offset by $6.5 million of accretion of the basis difference. On April 29, 2024, Laramie Energy made a cash distribution to its owners, including us, based on ownership percentage. Our share of this distribution was $1.5 million. For the year ended December 31, 2023, our proportionate share of Laramie Energy’s net income was $19.5 million, and the accretion of basis was $5.5 million. On March 1, 2023, following a refinancing of certain debt, Laramie Energy, LLC was permitted to make a one-time cash distribution to its owners based on ownership percentage. Our share of this distribution was $10.7 million. Please read “Note 4—Investment in Laramie Energy” to our consolidated financial statements under Item 8 of this Form 10-K for more information.
Income Taxes. For the year ended December 31, 2024, we recorded an income tax benefit of $5.7 million primarily due to a $5.5 million non-cash deferred tax benefit driven by our 2024 pre-tax losses. For the year ended December 31, 2023, we recorded an income tax benefit of $115.3 million primarily related to the release of the federal tax valuation allowance in the fourth quarter of 2023, partially offset by state taxes. Please read “Note 23—Income Taxes” to our consolidated financial statements under Item 8 of this Form 10-K for more information.
Condensed Consolidating Financial Information
On February 28, 2023, Par Petroleum, LLC (“Par Borrower”) entered into the Term Loan Credit Agreement (the “Term Loan Credit Agreement”) due 2030 with Wells Fargo Bank, National Association, as administrative agent, and the
lenders party thereto. The Term Loan Credit Agreement was co-issued by Par Petroleum Finance Corp. (together with the Par Borrower, the “Term Loan Borrowers”), which has no independent assets or operations. The Term Loan Credit Agreement is guaranteed on a senior unsecured basis only as to payment of principal and interest by Par Pacific Holdings, Inc. (the “Parent”) and is guaranteed on a senior secured basis by all of the subsidiaries of Par Borrower. The Term Loan Credit Agreement proceeds were used to refinance our existing Term Loan B and repurchase our outstanding 7.75% Senior Secured Notes and 12.875% Senior Secured Notes, all three of which had similar guarantees that were replaced by those on the Term Loan Credit Agreement.
The following supplemental condensed consolidating financial information reflects (i) the Parent’s separate accounts, (ii) Par Borrower and its consolidated subsidiaries’ accounts (which are all guarantors of the Term Loan Credit Agreement), (iii) the accounts of subsidiaries of the Parent that are not guarantors of the Term Loan Credit Agreement 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).
As of December 31, 2025
Parent Guarantor
Par Borrower and Subsidiaries
Non-Guarantor Subsidiaries and Eliminations
Par Pacific Holdings, Inc. and Subsidiaries
ASSETS
Current assets
Cash and cash equivalents
Restricted cash
Trade accounts receivable
Inventories
Prepaid and other current assets
Due from related parties
Current note receivable from subsidiaries
Total current assets
Property, plant, and equipment
Property, plant, and equipment
Less accumulated depreciation and amortization
Property, plant, and equipment, net
Long-term assets
Operating lease right-of-use (“ROU”) assets
Refining and logistics equity investments
Investment in Laramie Energy, LLC
Investment in subsidiaries
Intangible assets, net
Goodwill
Long term note receivable from subsidiaries
Other long-term assets
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current maturities of long-term debt
Obligations under inventory financing agreements
Accounts payable
Accrued taxes
Operating lease liabilities
Other accrued liabilities
Due to related parties
Total current liabilities
Long-term liabilities
Long-term debt, net of current maturities
Finance lease liabilities
Operating lease liabilities
Other liabilities
Total liabilities
Commitments and contingencies
Noncontrolling interest
Stockholders’ equity
Preferred stock
Common stock
Additional paid-in capital
Accumulated earnings (deficit)
Accumulated other comprehensive income (loss)
Total stockholders’ equity
Total liabilities, noncontrolling interest, and stockholders’ equity
As of December 31, 2024
Parent Guarantor
Par Borrower and Subsidiaries
Non-Guarantor Subsidiaries and Eliminations
Par Pacific Holdings, Inc. and Subsidiaries
ASSETS
Current assets
Cash and cash equivalents
Restricted cash
Trade accounts receivable
Inventories
Prepaid and other current assets
Due from related parties
Total current assets
Property, plant, and equipment
Property, plant, and equipment
Less accumulated depreciation and amortization
Property, plant, and equipment, net
Long-term assets
Operating lease right-of-use (“ROU”) assets
Refining and logistics equity investments
Investment in Laramie Energy, LLC
Investment in subsidiaries
Intangible assets, net
Goodwill
Other long-term assets
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current maturities of long-term debt
Obligations under inventory financing agreements
Accounts payable
Accrued taxes
Operating lease liabilities
Other accrued liabilities
Due to related parties
Total current liabilities
Long-term liabilities
Long-term debt, net of current maturities
Finance lease liabilities
Operating lease liabilities
Other liabilities
Total liabilities
Commitments and contingencies
Stockholders’ equity
Preferred stock
Common stock
Additional paid-in capital
Accumulated earnings (deficit)
Accumulated other comprehensive income (loss)
Total stockholders’ equity
Total liabilities and stockholders’ equity
Year Ended December 31, 2025
Parent Guarantor
Par Borrower and Subsidiaries
Non-Guarantor Subsidiaries and Eliminations
Par Pacific Holdings, Inc. and Subsidiaries
Revenues
Operating expenses
Cost of revenues (excluding depreciation)
Operating expense (excluding depreciation)
Depreciation and amortization
General and administrative expense (excluding depreciation)
Equity earnings from refining and logistics investments
Acquisition and integration costs
Par West redevelopment and other costs
Other operating loss (gain), net
Total operating expenses
Operating income (loss)
Other income (expense)
Interest expense and financing costs, net
Debt extinguishment and commitment costs
Other income (expense), net
Equity earnings (losses) from subsidiaries
Equity earnings (losses) from Laramie Energy, LLC
Total other income (expense), net
Income (loss) before income taxes
Income tax benefit (expense) (1)
Net income (loss)
Less:
Net loss attributable to noncontrolling interest
Net income attributable to Par Pacific stockholders
Adjusted EBITDA
Year Ended December 31, 2024
Parent Guarantor
Par Borrower and Subsidiaries
Non-Guarantor Subsidiaries and Eliminations
Par Pacific Holdings, Inc. and Subsidiaries
Revenues
Operating expenses
Cost of revenues (excluding depreciation)
Operating expense (excluding depreciation)
Depreciation and amortization
General and administrative expense (excluding depreciation)
Equity earnings from refining and logistics investments
Acquisition and integration costs (2)
Par West redevelopment and other costs
Other operating loss (gain), net
Total operating expenses
Operating income (loss)
Other income (expense)
Interest expense and financing costs, net
Debt extinguishment and commitment costs
Other income (expense), net
Equity earnings (losses) from subsidiaries
Equity earnings (losses) from Laramie Energy, LLC
Total other income (expense), net
Income (loss) before income taxes
Income tax benefit (expense) (1)
Net income (loss)
Less:
Net income attributable to noncontrolling interest
Net loss attributable to Par Pacific stockholders
Adjusted EBITDA
Year Ended December 31, 2023
Parent Guarantor
Par Borrower and Subsidiaries
Non-Guarantor Subsidiaries and Eliminations
Par Pacific Holdings, Inc. and Subsidiaries
Revenues
Operating expenses
Cost of revenues (excluding depreciation)
Operating expense (excluding depreciation)
Depreciation and amortization
General and administrative expense (excluding depreciation)
Equity earnings from refining and logistics investments
Acquisition and integration costs (2)
Par West redevelopment and other costs
Other operating loss (gain), net
Total operating expenses
Operating income (loss)
Other income (expense)
Interest expense and financing costs, net
Debt extinguishment and commitment costs
Other income (expense), net
Equity earnings (losses) from subsidiaries
Equity earnings (losses) from Laramie Energy, LLC
Total other income (expense), net
Income (loss) before income taxes
Income tax benefit (expense) (1)
Net income (loss)
Less:
Net income attributable to noncontrolling interest
Net income attributable to Par Pacific stockholders
Adjusted EBITDA
(1) The income tax benefit (expense) of the Parent Guarantor and Par Borrower 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.
(2) The acquisition and integration expense related to the Billings Acquisition was pushed down from the Parent Guarantor to the Issuer and Subsidiaries upon consummation of the transaction.
Non-GAAP Financial Measures
Adjusted EBITDA for the supplemental consolidating condensed financial information, which is segregated at the “Parent Guarantor,” “Par Borrower 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) attributable to Par Pacific stockholders and Adjusted EBITDA” above.
The following tables present a reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure, Net income (loss), on a historical basis for the periods indicated (in thousands):
Equity earnings from Laramie Energy, LLC, excluding cash distributions
Depreciation and amortization
Interest expense and financing costs, net, excluding unrealized interest rate derivative loss (gain)
Laramie Energy, LLC cash distributions to Par
Par’s portion of interest, taxes, depreciation and amortization expense from refining and logistics investments
Equity losses (income) from subsidiaries
Income tax expense (benefit)
Noncontrolling interest impact of non-GAAP adjustments
Adjusted EBITDA (1)
(1) Please read the Non-GAAP Performance Measures and Adjusted Net Income (Loss) attributable to Par Pacific stockholders and Adjusted EBITDA discussions above for information regarding the components of Adjusted Net Income (Loss) attributable to Par Pacific stockholders and Adjusted EBITDA.
(2) For the years ended December 31, 2025 and 2024, we incurred $0.8 million and $13.1 million of stock-based compensation expenses associated with equity awards modifications, respectively. For the year ended December 31, 2024, we incurred $0.8 million for a legal settlement unrelated to current operating activities.
Liquidity and Capital Resources
Capital Resources and Available Liquidity
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. Generally, the primary uses of our capital resources have been in the operations of our refining and retail segments, for payments related to acquisitions, to repay or refinance indebtedness, and to repurchase shares of our common stock.
Our liquidity position as of December 31, 2025, was $914.6 million, consisting of $164.1 million of cash and cash equivalents and $750.5 million of availability under the ABL Credit Facility. For the year ended December 31, 2025, we generated cash from operations of $445.3 million. Please read the Cash Flows discussion below for information regarding additional sources and uses of cash for the fiscal year ended December 31, 2025.
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. Please read the Cash Requirements section below for further information. We may seek to raise additional debt or equity capital to fund acquisitions and 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. Our expected cash inflows and cash requirements are subject to
the risks and uncertainties discussed in the Cautionary Statement Regarding Forward Looking Statements section of Item 1: Business and, for further information, the “Operating Risks” section of “Item 1A. Risk Factors”.
Significant Developments
On June 27, 2025, we entered into a RINs financing agreement with Citi (the “Product Financing Agreement”) to, among other things, provide funding to finance RINs; borrowings under the agreement are not to exceed $450 million in the aggregate when combined with obligations under the Inventory Intermediation Agreement. On October 2, 2025, we entered into an agreement with Wells Fargo (the “Renewables Intermediation Agreement”) to, among other things, provide funding to finance renewables feedstock. On October 21, 2025, we completed the transaction to form the Hawaii Renewables joint venture with Alohi in which Alohi contributed $100.0 million in cash in exchange for a minority interest in Hawaii Renewables. In connection with the transaction, Hawaii Renewables distributed $83.0 million to Par and approximately $17.0 million of Alohi’s contribution was retained by Hawaii Renewables to fund remaining construction and initial working capital. In connection with the Renewables Intermediation Agreement, on December 16, 2025, Hawaii Renewables entered into a Letter of Credit Facility Agreement (the “Renewables LC Facility Agreement”). On December 17, 2025, we amended the Term Loan Credit Agreement to reduce the applicable margin by 50 basis points. Please read “Note 5—Joint Venture”, “Note 13—Inventory Financing Agreements”, and “Note 15—Debt” to our consolidated financial statements under Item 8 of this Form 10-K for further information.
During the years ended December 31, 2025, 2024, and 2023, we had significant activity related to our inventory financing and debt agreements. Please read “Note 13—Inventory Financing Agreements” and “Note 15—Debt” to our consolidated financial statements under Item 8 of this Form 10-K for further discussion of significant activity related to our inventory financing and debt agreements, respectively.
Cash Requirements
We have various cash requirements stemming from investment strategies, contractual obligations, and financial commitments in the normal course of our operations and financing activities. Contractual obligations include future cash payments required under existing contractual arrangements, such as debt and lease agreements. These cash requirements and obligations may result from both general financing activities and from commercial arrangements that are directly related to our operating activities. We also continue to seek strategic investments in business opportunities, however the amount and timing of those investments are not predictable. Our known material cash requirements as of December 31, 2025, include the following and read “Note 15—Debt”, “Note 13—Inventory Financing Agreements”, and “Note 18—Leases” to our consolidated financial statements under Item 8 of this Form 10-K for our long-term commitments and further discussion:
Debt and Interest Payments. Current and long-term debt includes the scheduled principal and interest payments related to our outstanding debt obligations and ABL Credit Facility. Our estimated interest payments due for 2026 are $44.4 million and our total estimated undiscounted future interest payments will be $186.8 million on the debt obligations held as of December 31, 2025, and using interest rates in effect as of December 31, 2025. Our estimated principal payments due for 2026 are $7.5 million and our total estimated undiscounted future principal payments are $814.8 million on the debt obligations held as of December 31, 2025.
Product Financing. On June 27, 2025, we entered into a RINs financing agreement with Citi (the “Product Financing Agreement”) to, among other things, provide funding to finance RINs. As of December 31, 2025, there were no product financing obligations under the Product Financing Agreement.
Renewables Financing. On October 2, 2025, Hawaii Renewables entered into the Renewables Intermediation Agreement with Wells Fargo pursuant to which the parties agreed to a framework for entering into a series of Swap Transactions. In connection with the Renewables Intermediation Agreement, on December 16, 2025, we entered into the Renewables LC Facility Agreement. As of December 31, 2025, there were $31.3 million of outstanding obligations under the Renewables Intermediation Agreement with required cash outlays in the next twelve months and no letters of credit outstanding under the Renewables LC Facility.
Capital Expenditures and Turnaround Costs. Our deferred turnaround costs and capital expenditures, including land and building purchases but excluding acquisitions, for the year ended December 31, 2025, totaled approximately $250.1 million and were primarily related to 2025 turnaround activities and related scheduled maintenance work at our Montana refinery, repair and replacement work related to our Wyoming operational incident, the Hawaii Renewables hydrotreater project, and other capital projects and sustaining maintenance at all of our refineries and other businesses. Our capital expenditures and deferred turnaround costs budget for 2026 is approximately $190 to $220 million and primarily relates to the planned Hawaii and Wyoming refinery turnarounds and other scheduled maintenance, capital projects, and turnaround projects related to
regulatory compliance, information technology, and growth across each of our businesses with required cash outlays primarily expected in the next twelve months.
Operating Lease Liabilities. Operating lease liabilities primarily include obligations associated with the lease of land, office space, retail facilities, and other facilities used in the storage and transportation of crude oil and refined products. Please read “Note 18—Leases” to our consolidated financial statements under Item 8 of this Form 10-K for further discussion, including our related short- and long-term cash requirements.
Finance Lease Liabilities. Finance lease liabilities primarily include obligations associated with the lease of retail facilities and vehicles. Please read “Note 18—Leases” to our consolidated financial statements under Item 8 of this Form 10-K for further discussion, including our related short- and long-term cash requirements.
Purchase Commitments. Purchase commitments primarily consist of contracts executed as of December 31, 2025, for the purchase of crude oil for use at our refineries that are scheduled for delivery in 2026. As of December 31, 2025, we have non-cancelable material purchase commitments of $2.6 billion, with required cash outlays primarily expected in the next twelve months.
Environmental Matters. Our operations are subject to extensive and periodically-changing federal, state, and local environmental laws and regulations including but not limited to air emissions, wastewater discharges, and solid and hazardous waste management activities. Additionally, we have asset retirement obligations in the period in which we have a legal obligation, whether by government or regulatory action or contractual arrangement, to incur these costs and can make a reasonable estimate of the fair value of the liability. Please read “Note 12—Asset Retirement Obligations” and “Note 19—Commitments and Contingencies” to our consolidated financial statements under Item 8 of this Form 10-K for more information, including estimated long term cash requirements.
Other Cash Commitments. We may from time to time seek to retire or repurchase our common stock through cash purchases, in open market purchases, privately negotiated transactions, or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors. The amounts involved may be material. On February 21, 2025, the Board authorized and approved a share repurchase program authorizing the repurchase of up to $250 million of common stock, with no specified end date. This repurchase program terminated and replaced the prior share repurchase authorization. Please read “Note 20—Stockholders’ Equity” to our consolidated financial statements under Item 8 of this Form 10-K for additional discussion on the share repurchase program. The Term Loan Credit Agreement may also require annual prepayments of principal with a variable percentage of our excess cash flow, 50%, 25%, or 0% depending on our consolidated year end secured leverage ratio (as defined in the Term Loan Credit Agreement).
Cash Flows
The following table summarizes cash activities for the years ended December 31, 2025, 2024, and 2023 (in thousands):
Years Ended December 31,
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Cash flows for the year ended December 31, 2025
Net cash provided by operating activities for the year ended December 31, 2025, was driven primarily by net income of $367.1 million, non-cash charges to operations of approximately $200.8 million, and net cash used for changes in operating
assets and liabilities of approximately $122.5 million. Non-cash charges to operations consisted primarily of the following adjustments:
depreciation and amortization expenses of $144.3 million and
a $100.4 million decrease in net deferred tax assets driven by our net income during the period,
partially offset by
unrealized gain on derivatives contracts of $26.3 million and
$26.3 million of non-cash equity earnings from our refining and logistics investments.
Net cash used for changes in operating assets and liabilities resulted primarily from:
a $255.7 million increase in RINs and environmental credits as a result of current year purchases and SREs received for the 2019 through 2024 compliance years,
an increase in deferred turnaround assets of $101.2 million primarily driven by turnaround activities at the Montana refinery,
a $94.8 million decrease in Accounts payable driven by timing and lower crude prices, and
a $59.9 million decrease in Obligations under inventory financing agreements primarily related to decreases in the step-out liability driven by lower financed inventory volumes and prices,
partially offset by
an increase in environmental credit obligations of $148.4 million driven by current period production,
a $116.2 million decrease in inventories other than RINs and environmental credits primarily related to crude oil and feedstock inventories.
an $84.7 million decrease in Accounts receivable primarily driven by timing of collections, and
decrease in prepaid and other primarily driven by $31.6 million decrease in collateral posted with broker to support commodity derivative positions.
Net cash used in investing activities for the year ended December 31, 2025, consisted primarily of $148.9 million of additions to property, plant, and equipment driven by profit improvement and maintenance projects at our refineries, including our Hawaii renewable hydrotreater project, completed maintenance at our Montana refinery, and repair and replacement work related to our Wyoming operational incident, partially offset by $6.1 million of proceeds from the sale of assets, primarily related to the sale of property in Hawaii and Pacific Northwest retail stores.
Net cash used in financing activities was approximately $330.4 million for the year ended December 31, 2025, and consisted primarily of the following activities:
net debt repayments of $332.5 million primarily driven by activity in our ABL Credit Facility and
$123.9 million of common stock repurchases under the share repurchase program,
partially offset by
the sale of subsidiary units in our Hawaii Renewables joint venture of $100.0 million.
Cash flows for the year ended December 31, 2024
Net cash provided by operating activities for the year ended December 31, 2024, was driven primarily by non-cash charges to operations of approximately $208.6 million, net cash used for changes in operating assets and liabilities of approximately $91.5 million, and a net loss of $33.3 million. Non-cash charges to operations consisted primarily of the following adjustments:
depreciation and amortization expenses of $131.6 million;
unrealized loss on derivatives contracts of $42.5 million;
stock based compensation costs of $25.7 million, including $13.1 million related to the accelerated vesting of equity awards and modification of vested equity awards related to our CEO; and
dividends received from our refining and logistic investments of $13.1 million,
partially offset by
$11.9 million of non-cash equity earnings from our refining and logistics investments.
Net cash used for changes in operating assets and liabilities resulted primarily from:
an increase in deferred turnaround assets of $73.5 million driven by the 2024 Montana refinery turnarounds,
a $53.5 million decrease in Obligations under inventory financing agreements primarily related to the refinancing of our inventory financing agreements and a decrease in crude oil prices, and
a decrease in our gross environmental credit obligations primarily related to the settlement of our 2023 RINs and CCA obligations combined with lower environmental credit values,
partially offset by
a $62.9 million decrease in inventories, primarily related to the retirement of environmental credits and lower refined product and warehouse inventories.
Net cash used in investing activities for the year ended December 31, 2024, consisted primarily of:
$135.5 million in additions to property, plant, and equipment driven by maintenance projects at our refineries and various profit improvement projects.
Net cash used in financing activities for the year ended December 31, 2024, was approximately $37.0 million and consisted primarily of the following activities:
payments of $547.6 million related to the expiration of our Supply and Offtake Agreement and related deferred payment arrangement in the second quarter of 2024,
repurchases of common stock of $142.0 million, and
aggregate payments of $9.6 million of deferred loan costs,
partially offset by
net debt borrowings of $456.6 million primarily driven by activity in our ABL Credit Facility and the increase to the size of our Term Loan Credit Agreement, and
proceeds of $203.1 million related to the step-in of the Inventory Intermediation Agreement in the second quarter of 2024.
Cash flows for the year ended December 31, 2023
Net cash provided by operating activities for the year ended December 31, 2023, was primarily driven by net income of $728.6 million, non-cash earnings from operations of approximately $53.2 million, and net cash used for changes in operating assets and liabilities of approximately $96.3 million. Non-cash earnings from operations consisted primarily of the following adjustments:
deprecation and amortization expenses of $119.8 million,
debt commitment and extinguishment costs of $19.2 million, and
stock based compensation costs of $11.6 million,
partially offset by
a benefit from deferred taxes of $126.3 million,
unrealized gain on derivatives contracts of $49.7 million,
a gain of $25.0 million of our equity investment in Laramie Energy, and
$11.8 million of non-cash equity earnings from our refining and logistics investments.
Net cash used for changes in operating assets and liabilities resulted primarily from:
a decrease in gross environmental credit obligations primarily related tot the settlement of our 2020, 2021, and 2022 RINs obligations, and
an increase in prepaid and other primarily driven by a $65.5 million increase in Advances to suppliers for crude purchases.
Net cash used in investing activities for the year ended December 31, 2023, consisted primarily of:
a $595.4 million used for the Billings Acquisition, and
$82.3 million in additions to property, plant, and equipment driven by maintenance projects at our refineries and various profit improvement projects, including construction of a flagship retail store in Washington, improved crude processing equipment at our Hawaii refinery, a co-processing unit at our Tacoma refinery, and various IT infrastructure improvements,
partially offset by
a $10.7 million cash distribution received from Laramie Energy in the first quarter of 2023.
Net cash used in financing activities for the year ended December 31, 2023, was approximately $135.6 million and consisted primarily of the following activities:
net repayments under the Discretionary Draw Facility and Merrill Lynch Commodities, Inc. (“MLC”) receivable advances of $96.0 million,
aggregate payments of $23.1 million of deferred loan costs and debt extinguishment costs, related to our debt refinancing, and
repurchases of common stock of $67.8 million,
partially offset by
net borrowings of debt of $145.1 million primarily driven by the refinancing and consolidation of our debt.
Critical Accounting Estimates
The discussion and analysis of our financial condition and results of operations were based on the consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements required us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses. Our significant accounting policies are described in our audited consolidated financial statements under Item 8 of this Form 10-K. We have identified certain estimates as being of particular importance to the portrayal of our financial position and results of operations and which require the application of significant judgment by management. We analyze our estimates on a periodic basis, including those related to fair value, impairments, natural gas and crude oil reserves, bad debts, natural gas and oil properties, income taxes, derivatives, contingencies, and litigation and base our estimates on historical experience and various other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
Inventory and Obligations Under Inventory Financing Agreements
Commodity inventories, excluding commodity inventories at the Washington refinery, are stated at the lower of cost and net realizable value using the FIFO accounting method. Commodity inventories at the Washington refinery are stated at the lower of cost and net realizable value using the LIFO inventory accounting method. We value merchandise along with spare parts, materials, and supplies at weighted average cost. Estimating the net realizable value of our inventory requires management to make assumptions about the timing of sales and the expected proceeds that will be realized for these sales. Please read “Note 8—Inventories” to our consolidated financial statements under Item 8 of this Form 10-K for additional information.
Crude oil held in storage tanks at, and certain crude oil in transit to, the Hawaii refinery are financed by Citigroup Energy Inc. (“Citi”) under procurement contracts. The crude oil remains in the legal title of Citi and is stored in our storage tanks governed by a storage facilities agreement. Legal title to the stored crude oil passes to us at the tank outlet. After processing, Citi takes title to the refined products stored in our storage tanks until they are sold to third parties. Citi takes legal title of crude oil in transit at the specified purchase location with the third party supplier. We purchase the crude oil shipment from Citi at the SPM delivery point and we sell an equal quantity and quality of crude oil to Citi at the crude intake point. Legal title to crude oil in transit passes to us at the SPM delivery point for the upstream leg, and legal title passes to Citi at the crude intake point for the downstream leg. We record the inventory owned by Citi on our behalf as inventory with a corresponding obligation on our balance sheet in the amount we expect to pay to satisfy the repurchase obligation for the crude oil inventory then-owned by Citi following the expiration or termination of the Inventory Intermediation Agreement. The valuation of our repurchase obligation requires that we make estimates of the prices and differentials assuming settlement occurs at the end of the reporting period.
Under the Renewables Intermediation Agreement, Hawaii Renewables and Wells Fargo enter into a series of Swap Transactions on a monthly basis and Wells Fargo agrees to prepay a fixed amount to Hawaii Renewables, which is not to exceed $100 million. Hawaii Renewables utilizes the funding received from the Swap Transactions to support our Renewable Fuels Facility’s operations. Hawaii Renewables receives the title to and risk of loss of the renewable feedstocks beginning at the transfer point designated by the sourcing contracts. Hawaii Renewables notifies Wells Fargo of changes in titled inventories and receives swap financing for the renewable feedstock inventory in transit or held in tank storage before consumption at the Renewable Fuels Facility and, following production, for the refined fuels inventory held in tank storage at our facility in Hawaii and agreed upon locations prior to sale. We record the inventory owned by Hawaii Renewables with a corresponding obligation on our balance sheet in the amount we expect to pay to Wells Fargo for the swap settlements, based on the commodity rate changes on the inventory volumes underlying the fixed prepay amount received.
Please read “Note 13—Inventory Financing Agreements” to our consolidated financial statements under Item 8 of this Form 10-K for additional information regarding our Hawaii inventory financing agreement and Renewables Intermediation Agreement.
Fair Value Measurements
We measure certain assets and liabilities at their fair market value. Assets and liabilities measured at fair value on a recurring basis include derivative instruments and environmental credit obligations. We also measure certain assets and liabilities at fair value on a nonrecurring basis when specific triggering events occur, such as business combinations and events which indicate that a reporting unit’s carrying value exceeds its estimated fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. In estimating fair value, we use discounted cash flow projections, recent comparable market transactions, if available, or quoted prices. We consider assumptions that third parties would make in estimating fair value, including the highest and best use of the asset. The assumptions used by another party could differ significantly from our assumptions.
We classify fair value balances based on the classification of the inputs used to calculate the fair value of a transaction. The inputs used to measure fair value have been placed in a hierarchy based on priority. The hierarchy gives the highest priority to unadjusted, readily observable quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). Please read “Note 17—Fair Value Measurements” to our consolidated financial statements under Item 8 of this Form 10-K for additional information.
Business Combinations
We recognize assets acquired and liabilities assumed in business combinations separately from goodwill at their estimated fair values as of the date of acquisition. Significant judgment is required in estimating the fair value of assets acquired. We obtain the assistance of third-party valuation specialists in estimating fair values of tangible and intangible assets
based on available historical information and on expectations and assumptions about the future, considering the perspectives of marketplace participants. These valuation methods require management to make estimates and assumptions regarding characteristics of the acquired property and future revenues and expenses. Changes in these estimates and assumptions would result in different amounts allocated to the related assets and liabilities. The measurement period may be up to one year from the acquisition date; we may record adjustments to the preliminary purchase price allocation during this time, concluding at the end of the one year period or final determination of the values of consideration transferred and assets and liabilities assumed, whichever comes first. Subsequent adjustments, if any, are recorded to the consolidated statement of operations. Please read “Note 6—Acquisitions” and “Note 17—Fair Value Measurements” to our consolidated financial statements under Item 8 of this Form 10-K for further information.
Impairment of Goodwill and Long-lived Assets
We assess the recoverability of the carrying value of goodwill during the fourth quarter of each year or whenever events or changes in circumstances indicate that the carrying amount of the goodwill of a reporting unit may not be fully recoverable. We first assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. If the qualitative assessment indicates that it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value, a quantitative test is required. Under the quantitative test, we compare the carrying value of the net assets of the reporting unit to the estimated fair value of the reporting unit. If the carrying value exceeds the estimated fair value of the reporting unit, an impairmentloss is recorded. The fair value of a reporting unit is determined using the income approach and the market approach. Under the income approach, we estimate the present value of expected future cash flows using a market participant discount rate. Under the market approach, we estimate fair value using observable multiples for comparable companies within our industry. These valuation methods require us to make significant estimates and assumptions regarding future cash flows, capital projects, commodity prices, long-term growth rates, and discount rates. Please read “Note 11—Goodwill and Intangible Assets” to our consolidated financial statements under Item 8 of this Form 10-K for further information.
We review property, plant, and equipment, operating leases, deferred turnaround costs, and other long-lived assets whenever events or changes in business circumstances indicate the carrying value of the assets may not be recoverable. We use a cash flows model to estimate value because there is usually a lack of quoted market prices available for long-lived assets. Future cash flow estimates used for impairment reviews are based on assessments requiring judgment, including future production volumes, commodity prices, operating costs, margins, discount rates, expected capital expenditures, and other factors based on all available information available as of the date of the review. Impairment is required when the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying value. If this occurs, an impairmentloss is recognized for the difference between the fair value and carrying value. The fair value of long-lived assets is determined using the income approach. Please read “Note 10—Property, Plant, and Equipment” to our consolidated financial statements under Item 8 of this Form 10-K for further information.
Environmental Matters and Asset Retirement Obligations
We record liabilities when environmental assessments and/or remedial efforts are probable and can be reasonably estimated. Cost estimates are based on the expected timing and extent of remedial actions required by governing agencies, experience gained from similar sites for which environmental assessments or remediation have been completed, and the amount of our anticipated liability considering the proportional liability and financial abilities of other responsible parties. Usually, the timing of these accruals coincides with the completion of a feasibility study or our commitment to a formal plan of action. Please read “Note 19—Commitments and Contingencies” to our consolidated financial statements under Item 8 of this Form 10-K for further information about our environmental liabilities and assessments.
We record asset retirement obligations (“AROs”) at fair value in the period in which we have a legal obligation, whether by government action or contractual arrangement, to incur these costs and can make a reasonable estimate of the fair value of the liability. Estimating the cost and timing of future remedial efforts is difficult and related technologies, costs, regulatory and other compliance considerations, timing, discount rates, and other inputs considered in the valuations are subject to change. Please read “Note 2—Summary of Significant Accounting Policies”, “Asset Retirement Obligations,” to our consolidated financial statements under Item 8 of this Form 10-K for further information.
Income Taxes
We use the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and NOL and tax credit carry
forwards. The realizability of deferred tax assets is evaluated quarterly based on a “more likely than not” standard and, to the extent this threshold is not met, a valuation allowance is recorded. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. These liabilities are recorded based on our assessment of existing tax laws and regulations. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which these temporary differences become deductible and may vary from our estimates for a number of reasons, including different interpretations of tax laws and regulations. New tax laws and regulations, and changes to existing tax laws and regulations, are proposed and promulgated continuously. The implementation of future tax laws and regulatory initiatives, as well as future interpretations on historical tax laws and regulations, could result in increased tax liabilities that cannot be predicted at this time. Please read “Note 2—Summary of Significant Accounting Policies”, “Income Taxes,” to our consolidated financial statements under Item 8 of this Form 10-K for further information.
In the fourth quarter of 2023, we analyzed projections for our future taxable income and the absence of objective negative evidence, such as a cumulative loss in recent years. As a result of this analysis, we determined that we had sufficient positive evidence to release a majority of the valuation allowance against our federal net deferred tax assets and recognized a non-cash deferred tax benefit of $277.7 million for the year ended December 31, 2023. We retained a partial valuation allowance on certain state deferred tax assets primarily as a result of apportionment factors from minimal activity in certain states impacting assessed likelihood of future realizability. We will continue to reassess whether the balance of the valuation allowance is appropriate on a yearly basis and, given the totality of the facts and circumstances, both positive and negative, will adjust the remaining valuation allowance in future periods if the evidence supports doing so.
