Good morning, and welcome to Par Pacific's Second Quarter 2025 Earnings Call. Please note this event is being recorded. I will now hand it over to Ashimi Patel, Vice President of Investor Relations. Please proceed.

Thank you, Jason. Welcome to Par Pacific's second quarter earnings conference call. Joining me today are Will Monteleone, President and Chief Executive Officer; Richard Creamer, EVP of Refining and Logistics; and Shawn Flores, SVP and Chief Financial Officer. Before we begin, note that our comments today may include forward-looking statements. Any forward-looking statements are subject to change and are not guarantees of future performance or events. They are subject to risks and uncertainties, and actual results may differ materially from these forward-looking statements. Accordingly, investors should not place undue reliance on forward-looking statements, and we disclaim any obligation to update or revise them. I refer you to our investor presentation on our website and to our filings with the SEC for non-GAAP reconciliations and additional information. I'll now turn the call over to our President and Chief Executive Officer, Will Monteleone.

Thank you, Ashimi, and good morning, everyone. Second quarter adjusted EBITDA was $138 million and adjusted net income was $1.54 per share. Strong operations, combined with improving market conditions enabled us to generate solid profits during the quarter. We set a quarterly operational throughput record in Hawaii and the commercial organization was well positioned to capture improving market conditions during the Montana turnaround. Product margins remained firm with a combined index of approximately $13 per barrel so far in the third quarter, especially favoring our distillate-oriented yield profile. The Asian market outlook remains favorable with minimal increases in Chinese exports despite arbitrage opportunities to Europe. Each of our businesses is well positioned to maximize rates as we enter the third quarter. Our retail business continues to shine. Quarterly, same-store fuel and in-store revenue increased by 1.8% and 3% compared to the second quarter of 2024. Underlying profitability also improved, as demonstrated by our last 12 months total adjusted EBITDA climbing to $85 million. We also made considerable progress on key objectives during the quarter, and we are well on our way towards achieving our strategic priorities for the year. Montana team delivered solid results, executing the largest turnaround in the site's history. The completion of this event marks the approximate 2-year anniversary of the Montana acquisition. During this time, we addressed many of the higher risk reliability items. As we've done in prior acquisitions, we will now shift our focus towards improving the profitability of the site through a series of low capital, high-return projects. The Hawaii and Renewables team progressed the SAF project and remain scheduled for start-up in the second half of the year, and we are nearing mechanical completion and commissioning of the pretreatment unit. We're also pleased to announce the joint venture with Mitsubishi and ENEOS Corporation. Together, Mitsubishi and ENEOS will contribute $100 million for a 36.5% equity interest in the joint venture, while Par Pacific will remain with a 63.5% controlling interest. This strategic partnership will strengthen our renewable fuels capabilities, including our partners' expertise in global feedstock procurement and product uptake. Following regulatory clearance, we expect to receive the $100 million investment, which will cover the cost of our project. Despite policy uncertainty, our outlook remains constructive due to the flexibility and structural cost advantages of the project. Amidst this solid operational and strategic execution, we repurchased an additional $28 million of stock at a weighted average price of $17.63 bringing the year-to-date share count down by nearly 8%. Our current share count is approaching 50 million shares, and we continue to measure our financial performance by evaluating our free cash flow on a per share basis. Our balance sheet is in good shape, with ending liquidity of nearly $650 million, providing flexibility to pursue our strategic objectives and opportunistically repurchase shares. Looking forward, strong market conditions, reduced capital spending requirements and the expected receipt of JV proceeds position us to drive strong cash generation. I'll now turn the call over to Richard to discuss our refining and logistics operations.

Thank you, Will. Second quarter combined throughput was 187,000 barrels per day. In Hawaii, throughput was a record 88,000 barrels per day and production costs were $4.18 per barrel. Hawaii delivered strong results due to reliable operations, which enabled the site to run near nameplate capacity throughout the quarter. This record is a result of focus and effort of our team to sustainably de-constrain Hawaiian operations over the last 18 months. Washington throughput was 41,000 barrels per day and production costs were $3.73 per barrel, which highlights the site's low cost and efficient refining structure. Shifting to Wyoming, throughput was 13,000 barrels per day and production costs were $14.50 per barrel impacted by lower throughput and an incremental $4 million due to the crude heater outage. The refinery returned to full production capacity in April, and we expect to return to our normal operating expense run rate in the third quarter. Finally, in Montana, second quarter throughput was 44,000 barrels per day and production costs were $14.18 per barrel, reflecting lower throughput related to the successful completion of the FCC and alkylation unit turnaround. As Will said, we are pleased with the team's performance and their solid execution of the site's largest turnaround ever. Looking ahead to the third quarter, we expect Hawaii throughput between 78,000 and 81,000 barrels per day with July runs impacted by weather-driven crude delivery delays. Despite this, Hawaii downstream conversion units remain fully utilized through the consumption of intermediate inventory. Shifting to the Mainland, we expect Washington throughput to be between 39,000 and 41,000 barrels per day, Wyoming between 18,000 and 19,000 and Montana between 54,000 and 56,000, resulting in a system-wide throughput between 190,000 and 205,000 barrels per day. I'll now turn the call over to Shawn to cover the financial results.

Thank you, Richard. Second quarter adjusted EBITDA and adjusted earnings were $138 million and $78 million or $1.54 per share. Our Refining segment reported adjusted EBITDA of $108 million in the second quarter compared to a loss of $14 million in the first quarter. Starting in Hawaii, the Singapore 312 averaged $13.56 per barrel and our crude differential was $4.99, resulting in a Hawaii index of $8.57 per barrel. Hawaii margin capture was 119%, including a combined $4 million headwind from price lag and product crack hedging. Excluding these items, margin capture was 125%, reflecting favorable yield and reduced product imports, driven by record quarterly throughput rates. Looking ahead to the third quarter, we expect our Hawaii crude differential to land between $5.75 and $6.25 per barrel. In Montana, our index averaged $20.29 per barrel, margin capture was 110%, highlighting our ability to maintain strong clean product sales through strategic inventory drawdowns despite lower throughput rates during the turnaround. Looking ahead, our Montana indicator averaged $15.13 per barrel in July, supported by strong distillate margins across the Northern Rockies, offset by tighter heavy crude differentials. In Wyoming, our index averaged $21.41 per barrel, margin capture was 87%, impacted by the recent outage as we resumed full throughput rates in late April. Under FIFO accounting, we continue to expense high-cost purchased products into May, which reduced second quarter gross margin by approximately $8 million. Looking to the third quarter, we've returned to normal operations and expect operating expense to revert to prior run rate levels. Lastly, our Washington Index averaged $15.37 per barrel, an improvement of approximately $11 from the prior quarter, driven by tight distillate supplies in the Pacific and West. Margin capture was 75%, below our guidance range of 85% to 95%, primarily due to higher sales mix of asphalt and intermediate products during the summer demand season. In July, our Washington indicator averaged $13.74 per barrel, remaining well supported by strong clean product margins. Turning to the Logistics segment. Second quarter adjusted EBITDA came in at $30 million, consistent with our mid-cycle run rate guidance. In Wyoming, Logistics volumes began to recover following the restart of the refinery in April, across the rest of our logistics system, we saw strong utilization on our pipelines and truck racks, supported by seasonal strength in sales volumes. In the Retail segment, we reported second quarter adjusted EBITDA of $23 million, up from $19 million in the first quarter. The improvement was driven by higher fuel margins, same-store sales growth and lower operating costs. Corporate expenses and adjusted EBITDA totaled $24 million for the second quarter. We remain on track to achieve our company-wide cost reduction initiatives, targeting $30 million to $40 million in annual savings relative to last year. Excluding the Wyoming repair costs, year-to-date consolidated operating expenses were $412 million, reflecting a $24 million reduction compared to the prior year period. Moving to cash flows. Cash from operations during the second quarter totaled $83 million, excluding working capital inflows of $123 million and deferred turnaround expenditures of $72 million. We expect a partial reversal of the working capital inflow in the third quarter, primarily driven by the timing of derivative cash settlements, and return to typical accounts payable levels. Cash used in investing activities totaled $46 million, driven by capital expenditures. As Will noted, we expect capital expenditures to decline meaningfully during the second half of the year. Through June 30, accrued capital expenditures and turnaround costs totaled $173 million, with our full year outlook turning toward the upper end of our guidance of $240 million. Turning to capital allocation. We repurchased $28 million or 1.6 million shares of common stock during the second quarter. Year-to-date, we bought back 5.2 million shares at an average price of $15, reducing our basic shares outstanding by 8%. Moving to the balance sheet. Gross term debt as of June 30 was $641 million or 3x our trailing 12-month retail and logistics EBITDA at the low end of our 3 to 4x leverage target. With a record LTM EBITDA of $211 million, our growing retail and logistics cash flow comfortably supports our leverage profile. Total liquidity increased 23% during the second quarter to $647 million, supported by strong operating cash flows and expanding capacity under our ABL facility. Our solid financial position, combined with an improved market backdrop, positions us well to advance our strategic priorities moving forward. This concludes our prepared remarks. Operator, we'll turn it back to you for Q&A.

And our first question comes from Matthew Blair from TPH.

Could you talk a little bit about the drivers behind the strong capture rates in Hawaii in the second quarter? I believe your overall capture was 119%. And I think you mentioned that areas like price lag and the hedging were actually headwinds in the quarter. So what was on the other side of the provided tailwinds and enabled such a strong capture figure?

Yes, Matt, this is Shawn. You're correct. Our reported capture was 119%. And excluding the nonrecurring events of the price lag and crack hedging, it was 125% and I think over the last 2 or 3 years, our average capture in Hawaii has been 120%. So I think we've shown that we can outperform our steady guidance of 110% capture. And that's primarily driven by elevated clean product freight rates, which is included in our sales contracts. And then as you see throughput rates move higher, closer to nameplate capacity, our yield expense improves materially on a barrel-for-barrel basis. So I think as long as we sustain throughput rates in the mid-80s and continue to see elevated clean product freight, I fully expect capture rates to continue to outperform our guidance.

Yes, Matt, this is Will. I think that what I'd point out here is just at an 88,000 barrels per day throughput rate. Again, this reflects, I would say, over 18 months of work by the Hawaii team in really deconstraining and just improving overall heater efficiency inside the plant. So again, I think the yield profile on those last barrels produced is very attractive.

Sounds good. The SAF JV appears to be a significant success for Par. Could you explain how this deal was formed and what advantages it brings to Par? Also, is there any update on the timing for the start-up and when you anticipate the EBITDA contribution will begin appearing in Par's financials?

Sure, Matt. Yes. I think the discussions have been ongoing for an extended period of time. The key thing that’s driven really the partnership here is the relative attractive elements of our project. I think we've been mentioning this, but I'll reiterate, we see our SAF project as very attractive relative to the industry and it's driven really by our operating expense, given that it's inside the fence line of the plant. On a per gallon basis, we'd expect it to be very attractive and highly competitive. Second, really is logistics. I think we expect over time to sell the vast majority of our products locally in Hawaii, allowing us to leverage our existing proprietary distribution system. The capital efficiency of the project is the other piece that we've been touting. When you look at all those facets, they are the key ingredients for bringing in a partner of the quality of Mitsubishi and ENEOS. Ultimately, it was not a simple sum, but I think it's a great opportunity for us to expand our distribution capabilities on the West Coast, as Mitsubishi and others have access into the California market, which complements our positioning in Washington and just expands the flexibility that we're going to have in the overall renewable fuels business. Long story short, I see this as an attractive long-term partnership that unlocks the value of the renewables business and brings to bear a larger global scale that Mitsubishi and ENEOS have. We're targeting the second half of this year for the start-up. We're intending to bring online the pretreatment unit first, as I've referenced, go through the commissioning process there. I wouldn't expect to start seeing financial contributions from the joint venture until really the first quarter of '26. Just keep in mind, we'll be in commissioning and getting through the credit pathway establishment. It’s going to take us a quarter or two before we get to the right CI scores and ultimately to the run rate contributions for that business.

The next question comes from Ryan Todd from Piper Sandler.

I wanted to discuss the Rockies. There was a notably strong performance in Montana and Wyoming during the quarter, partly attributed to excess inventory sales. Could you provide insights on how much of this performance can be credited to those sales and what broader trends you anticipate in the region moving forward?

Yes, Ryan, I'll take the excess inventory sort of impacts on capture and will turn it to Will to talk about sort of the PADD 4 market in general. But I think the market environment that we're operating in the second quarter supported our capture guidance range of 90% to 100%. I think what drove capture closer to the 110% was our ability to draw down diesel and gasoline inventories. So then it's just a function of sales versus throughput. I think looking ahead, I'd just reiterate our guidance of 90 to 100 into Q3.

And then, Ryan, on the broader market, I think the PADD 5 and PADD 4 distillate markets are particularly tight. Big picture, I think you saw the export market open up in the PADD 5 market. You saw global distillate inventory start to draw down well below historical averages and that opened up attractive netbacks for exporting diesel. On top of that, you've seen production of biodiesel and renewable diesel come off materially. I should also say, imports of diesel and renewable diesel have come off materially as you saw the blenders tax credit expire. Thus you've had both export of conventional diesel and then a reduction in renewable barrels available as we worked into the second quarter. The market and supply position there is tight and reflects a globally tight distillate market. Those are the key drivers, and I'd broadly say a pretty typical driving season in terms of demand and fundamentals on the gasoline side is what we've seen so far.

Great. And then maybe one on kind of use of cash and shareholder returns. You've been pretty active in the first half of the year in terms of share buyback. You've got $100 million coming in the door from kind of proceeds from joint venture, CapEx budget that's rolling off pretty materially as you highlighted here in the second half of the year. But you've also talked in the past about being opportunistic with shareholder returns. How do you think about those dynamics as you look at the second half of the year?

Sure. Yes. I mean, what I would say is really our historical framework still holds today. When we're in an excess capital position like we are today, we get the chance to repurchase our shares below intrinsic value, and we see that opportunity. I think that opportunity is going to come and go based on the many variables that impact our business and markets as a whole. So a nimble approach is critical. We live in a volatile world, and things are changing quickly. What I would say is, as a management team, we are focused on actively weighing our growth prospects—both our internal growth capital projects and any M&A opportunities—against those opportunities to repurchase stock and other capital allocation alternatives. We really just want the most options on the table that we can execute at any point in time so that we can adapt quickly to how rapidly the world is changing.

Our next question comes from Neil Mehta from Goldman Sachs.

Just want your perspective on small refinery exemptions. Where do you think we are in terms of the timeline? And then any advice in helping us to size what this could mean for Par's cash flow?

Sure. I think broadly on small refinery exemptions, our expectation is that the EPA will, I suppose, follow the law and from our perspective, that means that it goes through a rigorous kind of refinery-by-refinery BOE scoring process to assess each plant. To give you some context, in the past, all three of our mainland refineries have qualified and received small refinery exemptions. That's really our expectation of the process. In terms of the timing, I won't hazard a guess, Neil. It's a highly politicized effort on all sides. Unfortunately, there would just be speculation to try and say that we know what the timeline is because it's been difficult for them to maintain a schedule. In terms of sizing of the opportunity, maybe I'll turn it to Shawn just to talk about the overall RIN positioning for us as a whole and what it means. Before I do that, I just want to clarify that any exemptions and return of RINs would be upside to us. We have really a balanced RIN asset and liability position today.

Neil, this is Shawn. To Will's point there, we've covered our obligations going back to 2019 through 2024. Any retroactive receipt of a small refinery exemption would be direct cash proceeds in terms of getting RINs back and selling those at market prices. When you think about our exposure on a go-forward basis, the mainland refineries have about $140 million RIN unit gross exposure. I think that's the best way to size up given that those three refineries received SREs in the past.

That makes sense. And then just talking about the Singapore market. Hawaii is, I would characterize it, at or maybe even above mid-cycle. So that happened really quick. It's great to see, but just the sustainability of it and there are some moving pieces here, right? Asia demand, Chinese oil demand is not that good. India, there's some debate around tariff impacts out there, and then we have this potential for the Chinese to ramp up product exports. So how do you think about some of those moving pieces and risks as you assess the path forward for Singapore margins?

Yes. I think we watch the Singapore market closely and have for the last 12 years. The theme that we continue to see is that the overall Chinese refining fleet remains focused on meeting internal demand is one theme that we see. The second is really just deeper and deeper integration between the refining fleet and their petrochemical complex. Internalizing demand and shifting product yields to the lighter end products so they can internalize their petchem complex. Those are the key policy pieces that we watch in terms of the export relief valve—it seems that has been relatively well contained. I wouldn't say we see anything right now that suggests there’s a material change coming in the future on Chinese exports, given their stated policy objectives. Big picture, demand in the Asia Pacific market remains steady, and a fair amount of arbitrage barrels still needed to clear from the Middle East and in India and even potentially from North Asia all the way into Europe to keep the Atlantic Basin balance for distillate. That’s the key thing we're watching, and I think we don't see a major shift there.

The next question comes from Michael Latimer from TD Cowen.

It's Mike here on for Jason Gabelman. First, could you just talk about how your niche markets in the Rockies and Pacific Northwest are shaping up quarter-to-date? Markets like Portland, for example, have been pretty elevated for quite some time now, so I'm just trying to get a handle on the durability of those margins.

Sure. Yes. I think I referenced that our July combined index is about $13 so far from aggregates of all of our markets, and that's pretty flat to where we were in June. The overall story there is very similar to what we saw in the back half of the second quarter in terms of the distillate market being strong. This is principally driven by an open export market and reduced supply of biodiesel or renewable diesel, which were not domestically produced as well as imported, given the changes in the recent production tax credit. Strong demand, particularly global demand, remains. All those pieces are pulling on the distillate barrel, while the gas side of the equation is probably in mid-cycle market condition. The biggest thing to watch in the future is the changes in the California refining fleet. If we see the two competitor refiners in Los Angeles and San Francisco cease operations in the fourth quarter and the first quarter of next year, it further shifts the import-export parity balance over time, practically putting you in a position where you're equally relying on renewables and biodiesel to balance the market.

All right. Great. And then my last one is just how you're thinking about your excess cash position. I think in the past, you've mentioned that the business is comfortable around $300 million of liquidity. Is that still the right range to think about? And then as your stock has run up a bit, just how your appetite for M&A would be with that excess cash?

Yes. I think we've stated that our minimum liquidity target is $250 million to $300 million. We're certainly in an excess capital position today. As Will mentioned earlier, we're going to continue to think about capital allocation in the same light and measure our opportunistic buybacks with pursuing our strategic growth priorities.

On the M&A front, I would just say it’s still a challenging market from a bid and ask perspective. We're today principally focused on trying to find and develop internal opportunities or smaller scale bolt-on solutions that help advance primarily on the cost reduction side, but certainly on other elements of market access that could improve our business, particularly on the Mainland.

The next question comes from Manav Gupta from UBS.

I apologize guys, I was having some technical difficulties, so couldn't join in time, so if this question has been asked, I apologize. But I just wanted your views on global quality discounts out there. How do you see heavier sour and other kinds of barrels in the global markets trading versus the light sweet barrels, if you could talk a little bit about that?

Sure. Big picture, I would say the future incremental supply looks like it should add pressure and expand the heavy-light dip as we head into the winter. However, I’m not seeing signs of that in the prompt market, which probably goes all the way out into the September, October timeframe. Continuing to see A&S and grades like that trade at some pretty elevated premiums to Brent. While incremental supply should help kind of bring quality differentials, we haven’t seen that emerge at this point.

You are seeing some tightening on the WCS side. Any comments you would like to make on that? I think WCS has now dropped to like 13% to WTI, but if you could—because you do use a lot of WCS in the system. So if you could talk a little bit about the WCS market also?

Yes. It’s certainly been tighter than we would expect in the high single digits at points here. Some incremental supply is coming back from Latin America, along with some reduced runs as we get to the turnaround season in the fourth quarter. Those are setting the stage there for a bit wider differentials. But nothing earth-shattering there compared to what you've heard in the market from other parties.

There are no more questions in the queue. This concludes our question-and-answer session. I'd like to turn the conference back over to Will Monteleone for any closing remarks.

Thank you. We're encouraged by the improving market backdrop and remain focused on executing on our key objectives as the key to driving our shareholder value. Thank you for joining us today.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.