Par Pacific Q3 2024 Earnings Report

Par Pacific EPS Results

• Actual EPS: -$0.10
• Consensus EPS: -$0.12
• Beat/Miss: Beat by +$0.02
• One Year Ago EPS: $3.15

Par Pacific Revenue Results

• Actual Revenue: $2.14 billion
• Expected Revenue: $1.88 billion
• Beat/Miss: Beat by +$260.51 million
• YoY Revenue Growth: -16.90%

Par Pacific Announcement Details

• Quarter: Q3 2024
• Date: 11/4/2024
• Time: After Market Closes
• Conference Call Date: Tuesday, November 5, 2024
• Conference Call Time: 10:00AM ET

Par Pacific (NYSE:PARR) owns and operates energy and infrastructure businesses. The company operates through Refining, Retail, and Logistics segments. The Refining segment owns and operates refineries that produce gasoline, distillate, asphalt, and other products primarily for consumption in Kapolei, Hawaii, Newcastle, Wyoming, Tacoma, Washington, and Billings, Montana. The Retail segment operates fuel retail outlets, which sell merchandise, such as soft drinks, prepared foods, and other sundries in Hawaii under the Hele, 76, and nomnom brands; and gasoline, diesel, and retail merchandise in Washington and Idaho. The Logistics segment owns and operates terminals, pipelines, single point mooring, marine vessels, storage facilities, loading and truck racks, and rail facilities to distribute ethanol, petroleum, and refined products throughout Hawaii, the United States West Coast, Washington, the Dakotas, and Wyoming; and a jet fuel storage facility and pipeline that serves Ellsworth Air Force Base in South Dakota. It also holds interest in refined products pipeline. In addition, the company owns and operates a marine terminal, a unit train-capable rail loading terminal; a truck rack, and a proprietary pipeline that serves Joint Base Lewis McChord. The company was formerly known as Par Petroleum Corporation and changed its name to Par Pacific Holdings, Inc. in October 2015. Par Pacific Holdings, Inc. was incorporated in 1984 and is headquartered in Houston, Texas.

Par Pacific Q3 2024 Earnings Call Transcript

Presentation

[Operator]

Good day, and welcome to the Par Pacific Third Quarter 20 24 Earnings Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Ashimi Patel, Vice President, Investor Relations.

[Operator]

Please go ahead.

[Ashimi Patel, Vice President - Investor Relations at Par Pacific]

Thank you, Chad. Welcome to Par Pacific's 3rd quarter earnings conference call. Joining me today are Will Monteleone, President and Chief Executive Officer Richard Creamer, EVP of Refining and Logistics and Sean 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.

[Ashimi Patel, Vice President - Investor Relations at Par Pacific]

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 Montelion.

[William Monteleone, President & CEO at Par Pacific]

Thank you, Ashimi, and good morning, everyone. 3rd quarter adjusted EBITDA was $51,000,000 and adjusted net loss was $0.10 per share. Operational performance was strong with record quarterly refining throughput, record logistics adjusted EBITDA and continuing in store retail improvements. The durability of our results in the challenging refining market reflect the benefits of our diversified business model and the unique markets we serve. The current refining margin environment is testing breakeven levels for many operators and is driving the next wave of supply rationalization starting in 2025.

[William Monteleone, President & CEO at Par Pacific]

Refining fundamentals suggest more balanced supply and demand and current margins. Simultaneously, global inventories remain below 5 year averages in most regions. Small changes and balances are driving outsized changes to margins. We are not waiting for the market to turn our way and are focusing on the things we can control. We are targeting to reduce 2025 fixed operating expenses by $30,000,000 to 40,000,000 dollars positioning our company to thrive in both high cycle and low cycle environments.

[William Monteleone, President & CEO at Par Pacific]

In retail, quarterly same store fuel volumes declined by 1.4%, while merchandise sales grew by 3.8% compared to the Q3 of 2023. While same store sales volumes were down, total fuel volumes were up approximately 100,000 gallons over this period, reflecting the contributions of our new stores. We continue to progress our strategic growth initiatives in the Q3. Investments and billings reliability are delivering encouraging results. Initial objectives were to drive reliability first and then work towards cost competitiveness.

[William Monteleone, President & CEO at Par Pacific]

We are accelerating focus on cost considering the current backdrop, while planning to complete the major FCC and operation unit turnaround during the first half of twenty twenty five. In Hawaii, we broke ground on the SAF project and are on track for start up the second half of twenty twenty five. We are encouraged by the improving renewable fuels backdrop on the West Coast and the Pacific Basin. This capital efficient project remains an important element of our future growth. Despite softer market conditions, our strong financial position affords us the capability to invest in our business and grow its long term profitability.

[William Monteleone, President & CEO at Par Pacific]

Executing the billings initiatives and delivering the Hawaii SAF project are focus areas to grow the earnings power of our business. I'll now turn the call over to Richard to discuss our refining and logistics operations.

[Richard Creamer, Executive Vice President of Refining & Logistics at Par Pacific]

Thank you, Will. The refining segment 3rd quarter combined throughput was a new par quarterly record of over 198,000 barrels per day, reflecting strong reliability and summer utilization. While achieving this record throughput, each of our refining teams has demonstrated their dedication to operating safely and continuously driving reliability improvement. In Hawaii, throughput was 81,000 barrels per day and production costs were $4.58 per barrel. The refinery team responded exceptionally well to reliability challenges and delivered 97% operational availability year to date.

[Richard Creamer, Executive Vice President of Refining & Logistics at Par Pacific]

Shifting to Wyoming, throughput was 19,000 barrels per day and production costs were $7 per barrel. Wyoming's 3rd quarter operational performance reflects the team's ability to consistently deliver competitive results. Moving to Washington, throughput was 41,000 barrels per day and production costs were $3.50 per barrel. The Washington team is delivering highly efficient and reliable operations while in this challenging market environment. Finally, billings delivered a strong 57,000 barrels per day of crude throughput with production cost of $11.61 per barrel.

[Richard Creamer, Executive Vice President of Refining & Logistics at Par Pacific]

The billings team safely completed the planned coker outage during the Q3. Our focus on mechanical availability and reliability has enabled us to optimize and extend our upcoming turnaround schedule. Billings will be our only 2025 turnaround with Hawaii and Wyoming shifting to 2026. In Washington, we've implemented various mechanical integrity programs enabling us to extend the turnaround cycle by 2 years to 2028 and transition to a 6 year cycle. These actions enhance the capital and operational efficiency at all of the sites.

[Richard Creamer, Executive Vice President of Refining & Logistics at Par Pacific]

Looking to the Q4, we expect throughput in Hawaii between 80,083,000 barrels per day, Wyoming between 15,017, Washington between 3841, and Billings between 4852, resulting in system wide seasonal throughput between 182,000 and 193,000 barrels per day. I'll now turn the call over to Sean to cover the financial results.

[Shawn Flores, Senior VP & CFO at Par Pacific]

Thank you, Richard. 3rd quarter adjusted EBITDA and adjusted earnings were $51,000,000 and a loss of $6,000,000 or $0.10 per share. The Refining segment reported adjusted EBITDA of $20,000,000 compared to $60,000,000 in the 2nd quarter. In Hawaii, the Singapore index averaged $11 per barrel and our crude differential was $6.51 resulting in a combined index of $4.49 per barrel. Hawaii margin capture was 136%, including the product crack hedge gain and price like benefits totaling $10,000,000 Excluding these benefits, Hawaii capture was 106%.

[Shawn Flores, Senior VP & CFO at Par Pacific]

We are increasing our benchmark capture guidance to a range between 100% and 110%, which incorporates over $20,000,000 of annual margin improvement related to the June working capital refinancing. Looking to Q4, we expect Hawaii crude differentials to land between $5.75 $6.25 per barrel. In billings, our U. S. Gulf Coast index averaged $14.14 per barrel, margin capture was 88%, reflecting higher crude costs of approximately $20,000,000 primarily driven by an increase in light crude mix during the 2nd quarter turnaround activities and the 1 quarter FIFO lag on costed crude differentials.

[Shawn Flores, Senior VP & CFO at Par Pacific]

3rd quarter margins were also influenced by market dynamics in the Pacific Northwest, which weighed on clean product netbacks in Eastern Washington. Looking ahead, billings feedstock costs are expected to improve as we return to a heavier crude diet in the 4th quarter. With coker maintenance activities completed, 4th quarter production costs are expected to return to prior run rates of approximately $55,000,000 Moving to Wyoming, capture to the Gulf Coast index was 97%, including a negative FIFO impact of $5,000,000 Adjusting for FIFO, Wyoming capture was 115%, consistent with typical summer premiums. Lastly, in Washington, our P and W index averaged 15.48 dollars per barrel. Margin capture was 11%, reflecting a challenging jet fuel and VGO market along the West Coast.

[Shawn Flores, Senior VP & CFO at Par Pacific]

Despite the margin backdrop, the combined refinery and logistics operations in Tacoma generated positive adjusted EBITDA during the Q3. With a low operating and capital cost structure, our Tacoma business competitively serves the Pacific Northwest through low margin cycles. The Logistics segment reported adjusted EBITDA of $33,000,000 in the 3rd quarter compared to $26,000,000 in the 2nd quarter, driven by record refining throughput of nearly 200,000 barrels per day and over 216,000 barrels per day of product sales across our system. Our retail segment reported adjusted EBITDA of $21,000,000 during the 3rd quarter compared to $19,000,000 in the 2nd quarter. Strong retail performance was driven by expanding fuel margins and continued growth in merchandise sales.

[Shawn Flores, Senior VP & CFO at Par Pacific]

Corporate expenses and adjusted EBITDA were $23,000,000 in the 3rd quarter or approximately $1,000,000 improvement compared to the Q2. Net cash provided by operations during the Q3 totaled $79,000,000 including a $67,000,000 working capital inflow related to the expected drawdown of inventories, partially offset by deferred turnaround expenditures of $16,000,000 Excluding these two items, cash from operations was $27,000,000 during the 3rd quarter. Cash used in investing activities totaled $28,000,000 primarily related to capital expenditures. Moving to financing activities, we repurchased $22,000,000 of common stock during the Q3, while reducing ABL borrowings by $14,000,000 Our share repurchase strategy will remain dynamic, adapting to changes to our medium term cash flow and liquidity outlook. Gross term debt as of September 30 was $546,000,000 near the bottom end of our term debt leverage targets of 3x to 4x our retail and logistics EBITDA.

[Shawn Flores, Senior VP & CFO at Par Pacific]

Total liquidity as of September 30th was $633,000,000 consisting of $184,000,000 in cash $450,000,000 in availability. With targeted minimum liquidity between $250,000,000 $300,000,000 our balance sheet is strong and well positioned to achieve our strategic growth objectives through the margin cycle. This concludes our prepared remarks. Operator, we'll turn it back to you for Q and A.

[Operator]

Thank you. We will now begin the question and answer session. And the first question will be from John Royall from JPMorgan. Please go ahead.

[Alejandra Magana, Vice President - Equity Research at JP Morgan]

Hi, good morning. This is Alejandra Magana on for John Royal. My first question is on share buybacks. How should we think about the buybacks in light of a worsening crack environment, but also recognizing that you've been responsive to price and look to buy back stock when the share price dips, would you use the balance sheet to increase your buybacks today given the price levels are attractive?

[Shawn Flores, Senior VP & CFO at Par Pacific]

Hey, Alejandra, it's Sean. I'll start and I'll let Will chime in. I think we our liquidity position remains strong at $630,000,000 I referenced the minimum liquidity targets of $250,000,000 to 300, so well in excess of those targets. And I think we're going to maintain an opportunistic approach to share buybacks. And ultimately, what we've said is it will be based on our medium term cash flow and liquidity outlook.

[Shawn Flores, Senior VP & CFO at Par Pacific]

Our views of fundamental value certainly hasn't changed during this cycle, and we'll continue to balance, I think, the opportunity of buying back our stock at really attractive prices, with the value of maintaining a strong balance sheet to support not only strategic growth, but some of the capital investments that we have over the next 6 to 9 months.

[Alejandra Magana, Vice President - Equity Research at JP Morgan]

Got it. Thanks for that. And then just switching gears, logistics had a very strong quarter. And while refining throughput was a record, it's a short history since you've acquired billings and these types of throughputs are likely repeatable. Can we expect that you can do 30 plus million of logistics EBITDA in a low 90s utilization environment going forward or are there any other moving pieces that may not be repeatable?

[Shawn Flores, Senior VP & CFO at Par Pacific]

Yes, Alejandra, I think our logistics mid cycle guidance that we've provided is $115,000,000 on an annualized basis, which would imply about $29,000,000 a quarter. But keep in mind, in Q2 and Q3, we are typically running at full rates and maximizing sales volume. So typically, you'll see higher than mid cycle margins in the summer environment.

[Alejandra Magana, Vice President - Equity Research at JP Morgan]

Got it. Thank you.

[Operator]

And the next question will be from Matthew Blair from Tudor, Pickering and Holt. Please go ahead.

[Matthew Blair, Managing Director at TPH&Co]

Thank you and good morning everyone. Sean, I think you mentioned a target to reduce OpEx by $30,000,000 to $40,000,000 in 2025. Do you have any examples of projects that you're undertaking to do this? And in terms of measuring this progress, would this come through in refining OpEx or are there any other line items that we should be keeping an eye on?

[William Monteleone, President & CEO at Par Pacific]

Matthew, it's Will. I'll take this on. The two major areas are reductions in corporate expense related to getting down to 1 IT system. So we are still in 2 systems related to the Billings acquisition and have excess costs impacting our corporate spend. So I think that's roughly half.

[William Monteleone, President & CEO at Par Pacific]

And then the other half is a mixture of refining and logistics costs. So I think you'll principally see it impact refining OpEx. And that's probably the 2 locations where you'd see flow through the income statement.

[Matthew Blair, Managing Director at TPH&Co]

Sounds good. Thanks. And then could you talk about your long term outlook for the Washington refinery? We've seen some competitors on the West Coast announced their intention to close and fundamentals have been a little tough lately. How do you see the long term outlook for Tacoma?

[William Monteleone, President & CEO at Par Pacific]

Sure. Certainly difficult fundamental backdrop on the West Coast as reflected in our quarterly results. The way we think about Tacoma is ultimately it's a low cost player in that market. When you look at our operating costs in the $3.50 per barrel range and the capital efficiency that plant has, it's one of its major advantages. And I think in addition, it has feedstock advantages versus its peers who are principally buying waterborne crude.

[William Monteleone, President & CEO at Par Pacific]

So, 2 unique attributes of that facility that I think present it to minimize cash consumption through the cycle and bought in poor margin environments like we're in, but allow dissipate in the upside when you're going to which I think are inevitable along the West Coast as you think about the supply rationalization changing in big chunks while demand is not moving in the same manner.

[Matthew Blair, Managing Director at TPH&Co]

Great. Thank you.

[Operator]

And the next question will be from Ryan Todd from Piper Sandler. Please go ahead.

[Ryan Todd, Senior Research Analyst at Piper Sandler Companies]

Great. Thanks. Maybe a couple of quick ones. Despite investor concerns over recent months on Asian refining margins and economic backdrop over there, your Hawaiian asset continues to exceed expectations. Can you talk about how you're seeing the environment out there and what continues to sustain the relatively strong performance out in Hawaii?

[William Monteleone, President & CEO at Par Pacific]

Sure, Ryan. I think the work that you see in the performance in Hawaii is really evidence of 5 plus years of effort by our team. And I think you see that in Hawaii and I think you see that in Wyoming. But as you think about Asia, I think ultimately our Hawaii business has improved to where even at mid cycle or probably below mid cycle conditions like we're seeing, ultimately we can still generate positive adjusted EBITDA and this is due to our cost structure there as well as our commercial agreements. So I think those are the key factors that are in place.

[William Monteleone, President & CEO at Par Pacific]

As you think about Asia broadly, we're seeing improvements in the Singapore 312 market, I think largely driven by increases in jet demand seasonally and the Chinese policies are limiting exports. So that's at the margin changing real time, I think some of the supply demand balances for distillate in the Pacific Rim. I think that's worth watching, but ultimately I think the key factor for distillate balances heading into the winter in Asia.

[Ryan Todd, Senior Research Analyst at Piper Sandler Companies]

Great. Thanks. And then maybe a second one. Thanks for the update on the upcoming turnaround schedule and some of the adjustments you've been able to make. Can you provide any additional color on what you've been able to do to spread out the turnaround schedule for some of your assets there?

[Ryan Todd, Senior Research Analyst at Piper Sandler Companies]

What might this mean for kind of the right way to think about average annual turnaround capital requirements across your system and maybe for the overall kind of annual capital requirements for your business?

[Richard Creamer, Executive Vice President of Refining & Logistics at Par Pacific]

Yes, Ryan, this is Richard Creamer. I think the work that we've done over the last couple of years on improving our mechanical integrity programs and systems has allowed us to stay on top of some of the reliability opportunities that we've had in the past and has allowed us to correct those. And now we're at a position where we can take advantage of some of that work and extend these turnaround periods on out, which gives us a longer period to amortize those turnaround costs out.

[Shawn Flores, Senior VP & CFO at Par Pacific]

Yes, Ryan, this is Sean. We're continuing to sort of guide towards $40,000,000 of amortized turnaround expenditures over the cycle.

[Ryan Todd, Senior Research Analyst at Piper Sandler Companies]

Great. Thank you.

[Operator]

And the next question is from Neil Mehta from Goldman Sachs. Please go ahead.

[Neil Mehta, Head of Americas Natural Resources Equity Research at Goldman Sachs]

Yes. Thanks so much. Maybe just to build on the Washington comments, because it was a very tough quarter there with very low capture rates. I don't think that's representative of the normalized earnings power of Washington. So maybe you could just talk about where there's some one time dynamics.

[Neil Mehta, Head of Americas Natural Resources Equity Research at Goldman Sachs]

And since the quarter, you've seen West Coast crack strengthen, particularly LA Jet. So maybe you could talk about how we should think about that asset inflecting as we move into 2025?

[William Monteleone, President & CEO at Par Pacific]

Sure, Neal. It's Will. I'll take a couple of these and maybe Sean will add on a few. But specifically, what Sean was calling out that's outside of our indexes, Jet and West Coast VGO. So I think on the Jet side, you're correct, we saw significant pressure on West Coast Jet during the Q3.

[William Monteleone, President & CEO at Par Pacific]

And I think part of this is related to overall jet balances shifting as you're seeing the West Coast refining fleet pivot its distillate or its diesel production for jet given the increase in our depenetration. I think nonetheless, the marginal barrel of jet still needs to be imported long haul from Asia to balance the West Coast market. So I think you're seeing that play out in the Q3. And as you're seeing run rates come down in the Q4 and coinciding with my prior comment on the tightness in jet in the Asian market that we're seeing emerge in the Q4, I think those are the factors that are really impacting the ramp up in LA jet prices and broadly West Coast jet prices. The VGO market is really more of a global phenomenon and I think as you've seen, Dangote ramp up, you've seen a lot of excess VGO buildup in the Atlantic Basin and that's trickling over in the Pacific Basin.

[William Monteleone, President & CEO at Par Pacific]

As they move towards finished fuel production, I suspect that's going to change balances. But again, I think very dynamic and ultimately our positioning there is a low cost operator, both capital and operating expense as well as feedstock advantage are really the keys that we think sustain that over a long period of time. And I think it will inevitably be margin flow and opportunities where we can capture them.

[Neil Mehta, Head of Americas Natural Resources Equity Research at Goldman Sachs]

Yes. Thanks, Will. And the follow-up is, as you think about the Billings refinery, that has been impacted by some of the inventory dynamics and around asphalt. But as you think about that acquisition into 2025, can you talk about how you're seeing some of the moving pieces, whether it's WCS, normalized margins now that we've worked through those inventories, operational run rates, just your pulse check on that asset would be helpful? Thanks.

[William Monteleone, President & CEO at Par Pacific]

Sure. I think overall, big picture, still remain very pleased with billings and I think believe in its capability to deliver the mid cycle cash flow contributions that we set out to when we underwrote the transaction. There are many moving pieces, but on the whole, I would say seeing positive improvement on our ability to exceed our 50,000 barrel per day initial target. I think our operating expenses have been higher than our $10 per barrel target, but I think there's a path to getting back towards that. Once we get through the major cat cracker turnaround here in 2025.

[William Monteleone, President & CEO at Par Pacific]

And then I think ultimately the view that we can balance heavy crude throughput and medium and light crude throughputs to optimize transportation fuel yields versus asphalt over time, I think remains the last leg of improving our ability to both achieve and exceed the initial mid cycle guidance we provided.

[Neil Mehta, Head of Americas Natural Resources Equity Research at Goldman Sachs]

Well, Craig, I'll sneak one more in here, which is the stock's obviously been under enormous pressure this year after a very good run. And can't help but think there's so much embedded value in the retail business that isn't reflected in the valuation here. How do you think about helping investors understand the value of the retail brands and pulling that some of that forward?

[William Monteleone, President & CEO at Par Pacific]

Yes, absolutely. I think our retail business, as you can see, has been a significant financial contributor for us over the last 5 years. It's grown nicely. And

[William Monteleone, President & CEO at Par Pacific]

yes,

[William Monteleone, President & CEO at Par Pacific]

I think ultimately, is a premium multiple business to our manufacturing and distribution business. That said, I think it's quite strategic to us. We're happy with that business. And we think it has some significant growth opportunities. And so I think what you'll see is we consider growing that business.

[William Monteleone, President & CEO at Par Pacific]

We may look at alternatives that would improve our capabilities there. But I think as you think about the strategic benefits in the markets we operate, it has significant value to us, probably above and beyond just the multiple arbitrage that you're referencing.

[Neil Mehta, Head of Americas Natural Resources Equity Research at Goldman Sachs]

Okay. Thank you, sir.

[William Monteleone, President & CEO at Par Pacific]

Thanks, Neil.

[Operator]

And the next question will be from Jason Gabelman from TD Cowen. Please go ahead.

[Jason Gabelman, Analyst at Cowen]

Good morning. Thanks for taking my questions. I wanted to touch on CapEx spend this year and next year. It seems like CapEx is trending a bit light. You'd have to maybe double spend from 3Q to 4Q to reach guidance.

[Jason Gabelman, Analyst at Cowen]

Is that what the market should expect? And then as you think about 25 CapEx, given spend on the SAF project and additional turnaround, perhaps some capital spend tied to the cost reduction initiatives? Can you just talk us through the year over year bridge to 25 spend? Thanks.

[Shawn Flores, Senior VP & CFO at Par Pacific]

Sure, Jason. It's Sean. I think you're right. We expect our cash CapEx to track near the low end of our guidance for 2024, which was 220 to 250. Year to date through 9.30 CapEx and turnaround was 146.

[Shawn Flores, Senior VP & CFO at Par Pacific]

I guess the one thing I'd point out for 2024 is just keep in mind our renewables project in Hawaii is more back end weighted, so you should see some elevated CapEx in the Q4. And then also keep in mind when we put out guidance each year, we think about CapEx as incurred, not necessarily cash. And our year to date accrued cash CapEx is trending about $20,000,000 higher than cash. So I wanted to point that out as you think about 2025. And then I think we're going to provide official CapEx guidance in late December like we typically do.

[Shawn Flores, Senior VP & CFO at Par Pacific]

But directionally, I would point out, we expect about $80,000,000 to $100,000,000 of turnaround expenditures, primarily related to the billings, FCC and ALCI work, as well as pre spending in Hawaii and Wyoming for the 2026 events. And then we'll have about $30,000,000 to $40,000,000 remaining on the Hawaii renewable conversion project in 2025. So again, we'll put out more specific guidance in December on maintenance, sustaining and other growth capital.

[Jason Gabelman, Analyst at Cowen]

Okay. Thanks. And my other question is on the balance sheet and the stock has weakened following moving inventory financing to on the balance sheet. And it seems like the company is trying to split out that financing in the ABL versus what you consider structural debt within that term debt line item. So can you just talk about if that's kind of the right way to think about it and why taking this approach to balance sheet management is maybe a bit better than what you had when that inventory was off balance sheet?

[Shawn Flores, Senior VP & CFO at Par Pacific]

Sure. Yes, I think we certainly view the ABL funding separately from term debt. We've maintained our term debt leverage target of 3x to 4x the logistics and retail EBITDA. That's been in place for multiple years. And I think we're at the low end of that range as we sit today.

[Shawn Flores, Senior VP & CFO at Par Pacific]

On the ABL and working capital funding, this sort of solely supports our inventory management and working capital needs. And I think it's worth pointing out that over the past year, our working capital funding and really financing has decreased materially. When you go back and look at the balance sheet, the intermediations would show up in current liabilities. A year ago, that was an $850,000,000 liability. Today, as of ninethirty, it's $165,000,000 And so when you combine the ABL funding and the smaller S and O intermediation in Hawaii as in ninethirty, we're about $175,000,000 below our year ago levels.

[Shawn Flores, Senior VP & CFO at Par Pacific]

So I think we've not only do we view the ABL funding as purely working capital funding supporting our accrued purchases, the funding itself has significantly decreased over the last year.

[Jason Gabelman, Analyst at Cowen]

Great. Thanks for the answers.

[Operator]

The next question is from Manav Gupta from UBS. Please go ahead.

[Manav Gupta, Executive Director at UBS Group]

Hey, I just have one question. Can you provide more details around what's your outlook for the differentials for the Hawaii region in particular? How do you see those spreads moving out in the next 6 to 9 months?

[William Monteleone, President & CEO at Par Pacific]

Sure, Manav. It's Will. I think you can see the modest reduction in our expected landed crude differential in the Q4. Keep in mind that's 90 plus days lag versus real time market conditions. So that really reflects crude market conditions during the Q3 per se.

[William Monteleone, President & CEO at Par Pacific]

If you roll forward, as you've seen the curve, you've seen the accreditation costs come down, seen freight start to soften. And just big picture, you've seen kind of the physical market soften. So I would give you the directional guidance that we are seeing improvements in our landed crude differentials as you look forward. None of those are final at this point. But I think directionally, the major factors that impact our landed cost of crude are trending favorably.

[Manav Gupta, Executive Director at UBS Group]

Thank you so much.

[Operator]

Thank you. And the next question is a follow-up question from Jason Gabelman from TD Cowen. Please go ahead.

[Jason Gabelman, Analyst at Cowen]

Yes. Sorry, just one more for you on Hawaii. I know it benefits from product tanker rates and those have been strong in the past couple of years. Can you just talk about what you're seeing in the product tanker market quarter to date in 4Q and what you expect moving forward?

[William Monteleone, President & CEO at Par Pacific]

Sure, Jason. It's Will. I think in the Q4, we've seen softening on the product tanker rate side for clean product. And ultimately, I think we're starting to see it stabilize at current levels. I would still characterize it broadly as kind of in the probably $6 per barrel range versus call it pre COVID type world where it was $3.50 And so I think you're still seeing elevated versus history, but not near the peaks that we would have seen probably at close to $11 a barrel during the height of really some of the significant trade flow disruptions that were happening during the Russian initial stages of the Russian invasion.

[Jason Gabelman, Analyst at Cowen]

Great. Thanks for that.

[Operator]

And ladies and gentlemen, this concludes today's question and answer session. I would like to turn the conference back over to Will Monteleone for any closing remarks.

[William Monteleone, President & CEO at Par Pacific]

Thank you, Chad. Our unique asset portfolio is well positioned, while delivering upside during mid and peak cycle conditions. Your management team is focused on improving our cost structure and executing on our growth objectives to drive the enterprise forward. Thanks for joining us today.

[Operator]

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

Participants

Executives

• Ashimi Patel, Vice President - Investor Relations
• William Monteleone, President & CEO
• Richard Creamer, Executive Vice President of Refining & Logistics
• Shawn Flores, Senior VP & CFO

Analysts

• Alejandra Magana, Vice President - Equity Research at JP Morgan
• Matthew Blair, Managing Director at TPH&Co
• Ryan Todd, Senior Research Analyst at Piper Sandler Companies
• Neil Mehta, Head of Americas Natural Resources Equity Research at Goldman Sachs
• Jason Gabelman, Analyst at Cowen
• Manav Gupta, Executive Director at UBS Group