Par Pacific Q2 2026 Earnings Call Transcript

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August 5, 2026

Key Takeaways

  • Positive Sentiment: Second-quarter results were exceptionally strong: adjusted EBITDA reached $571 million and adjusted net income was $499 million, or $10.10 per share, driven by a refining index of approximately $33 per barrel and 125% system-wide margin capture.
  • Positive Sentiment: The company reduced net debt by more than $220 million, including a 20% reduction in term debt, and ended the quarter with approximately $1.4 billion of liquidity, providing flexibility for growth investments and future share repurchases.
  • Neutral Sentiment: Hawaii’s turnaround was substantially completed near its targeted cost and schedule, but its financial impact will be concentrated in the third quarter; management expects Hawaii refining capture to fall below its typical 100%-110% normalized range as imported inventory is consumed and throughput ramps up.
  • Positive Sentiment: Market conditions remain supportive in management’s view, with tight global refined-product inventories, limited Chinese product exports, strong seasonal demand, and firm distillate margins expected to support the mainland system.
  • Negative Sentiment: The company expects to use a substantial portion of its approximately $700 million year-end net operating loss balance in 2026 and potentially return to a more typical federal tax position in 2027; third-quarter results will also face $6 million-$8 million of Montana coker maintenance costs and a heavier asphalt sales mix.
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Earnings Conference Call
Par Pacific Q2 2026
00:00 / 00:00

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Operator

Good day. Welcome to the Par Pacific second quarter 2026 earnings conference call. All participants will be in a 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 Jeff Hollis, Senior Vice President, General Counsel, and Secretary. Please go ahead.

Jeff Hollis
Jeff Hollis
SVP, General Counsel, and Secretary at Par Pacific

Thank you, operator. Welcome to Par Pacific's earnings conference call. Joining me today are Will Monteleone, President and CEO, Richard Creamer, EVP of Refining and Logistics, and Shawn Flores, CFO. 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. Actual results may differ materially from these forward-looking statements. Accordingly, investors should not place undue reliance on forward-looking statements. 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 additional information. I'll now turn the call over to our President and CEO, Will Monteleone.

Will Monteleone
Will Monteleone
President and CEO at Par Pacific

Thank you, Jeff. Good morning, everyone. We're pleased to report strong second-quarter financial results driven by excellent operational and commercial execution. Amidst extreme volatility, each of our business units executed crisply and used the full commercial flexibility of our asset base to capture market conditions. System throughput ran at elevated levels through the peak margin window. Our commercial team optimized crude sourcing and product placement, generating excellent capture rates. Fine product cracks remained materially above historical norms through the quarter. Our combined market index averaged approximately $33 per bbl, well above the 2025 average of $12.40 per bbl and exceeding the second quarter of 2022 when the Russia-Ukraine conflict was intensifying. Reduced Persian Gulf and Russian origin refined product exports, Asian refiners running conservatively to preserve crude supply chain duration, and protectionist policies restricting free trade drove these favorable market conditions.

Will Monteleone
Will Monteleone
President and CEO at Par Pacific

Looking forward, global refined product inventories remain tight. The structural factors supporting margins remain. Turning to retail, same-store fuel volumes declined by 0.8%, while in-store sales increased by 1% compared to the second quarter of 2025. Despite pressure on fuel margins in a higher price environment, the merchandising and food programs continued to advance, strengthening the underlying earnings power of the segment. On the strategic front, our Hawaii renewables business made steady progress. renewable diesel production ramped through the quarter, with June throughput reaching approximately 3,000 bbl per day before we commenced the Hawaii plant-wide turnaround. In addition, we completed the first commercial renewable diesel sales during the quarter. Volumes were small and reflect the early-stage nature of the commercial ramp. They established the operational pathway from production to sales.

Will Monteleone
Will Monteleone
President and CEO at Par Pacific

On the capital allocation front, we meaningfully strengthened the balance sheet during the quarter, reducing our term debt balance by over 20% via the inaugural senior unsecured notes issuance. We ended the quarter with total liquidity of approximately $1.4 billion, placing our balance sheet in a very strong position to pursue growth and continue to allocate capital thoughtfully through cycles. In closing, our through-cycle discipline on operations, commercial positioning, and capital allocation is what allowed us to convert an exceptional market environment into a durably stronger balance sheet and strong per-share earnings. We remain focused on maintaining that discipline as market conditions evolve. With that, I'll hand the call to Richard, who will walk through our refining logistics results.

Richard Creamer
Richard Creamer
EVP of Refining and Logistics at Par Pacific

Thank you, Will. I want to begin by congratulating the Wyoming and Montana teams for the safe and efficient completion of their scheduled outages in April. In addition, the Tacoma team achieved a new record quarterly production rate of 41,200 bbl per day, or 98.1% utilization through the second quarter. In Hawaii, the Q2 throughput was 73,200 bbl per day, and production costs were $6.43 per bbl. The lower production versus plan was the result of the refinery experiencing end-of-cycle conditions. The team delivered on all customer fuel requirements despite challenges associated with the ongoing conflict in the Middle East. The turnaround in Hawaii began in late June, and I am pleased to report that the team executed the turnaround safely and cleanly while also delivering costs and schedules near target. At this point, the Hawaii turnaround is substantially complete, and major operations have been safely restarted.

Richard Creamer
Richard Creamer
EVP of Refining and Logistics at Par Pacific

As I stated, Washington throughput set a new quarterly 41,200 bbl per day, and production costs were $4.21 per bbl, capturing market conditions following the Q1 planned outage. Shifting to Wyoming, throughput was 14,000 bbl per day, and production costs were $15.28 per bbl, reflecting the April outage downtime and costs. Following the outage, the refinery shifted to routine operations supported by strong seasonal demand. In Montana, second quarter throughput was 53,000 bbl per day, and production costs were $10.16 per bbl. The team executed the April crude outage safely, on time, and on budget. In May and June, Par Montana refining set new monthly throughput and OpEx per barrel records of approximately 62,000 bbl per day at $7.56 per bbl.

Richard Creamer
Richard Creamer
EVP of Refining and Logistics at Par Pacific

Looking ahead to the third quarter, we expect Hawaii conventional throughput between 59,000 bbl per day and 65,000 bbl per day and renewable throughput between 1,500 bbl per day and 2,000 bbl per day, reflecting the turnaround event in July through early August. In the mainland, Washington is expected between 40,000 bbl per dayand 42,000 bbl per day, Wyoming between 17,000 bbl per day and 20,000 bbl per day, and Montana between 56,000 bbl per day and 61,000 bbl per day. The Montana coker was down in July for routine maintenance and is expected to return to service by mid-August. From today's date, there are no significant planned downtime for the balance of the year. The Q3 midpoint throughput guidance is 182,000 bbl per day. Now I'll turn the call over to Shawn to cover our financial results.

Shawn Flores
Shawn Flores
CFO at Par Pacific

Thank you, Richard. Second quarter adjusted EBITDA was $571 million and adjusted net income was $499 million or $10.10 per share. Our refining segment reported adjusted EBITDA of $552 million in the second quarter compared to $69 million in the first quarter, reflecting a sharp step-up in market conditions driven by the disruptions in crude and refined product supply. Our combined refining index averaged approximately $33 per bbl, an increase of roughly $14 per bbl compared to the first quarter. System-wide refining capture was 125%, or 112% on a normalized basis after adjusting for Hawaii price lag and Wyoming FIFO impacts. Starting in Hawaii, the Singapore 3-1-2 averaged approximately $50 per bbl, and our landed crude differential was $3.93, resulting in a Hawaii index of approximately $46 per bbl. Hawaii capture was 124%, including a net price lag benefit of approximately $77 million or $11.49 per bbl.

Shawn Flores
Shawn Flores
CFO at Par Pacific

Normalized for the price lag impact, Hawaii capture was 99%. In Montana, the second quarter index averaged $25.76 per bbl with margin capture of 144%. Capture was well above our target range, driven by favorable clean product to asphalt sales mix and refined product inventory drawdowns that sustained volumes during the April outage. In Wyoming, the second quarter index averaged $28.73 per bbl. Margin capture was 118%, including the benefit of refined product inventory draws during the April outage, partially offset by a $3 million FIFO headwind from declining crude oil prices. In Washington, our index averaged $20.27 per bbl. Margin capture was 100%, supported by continued jet-to-diesel strength on the West Coast. Turning to the logistics segment, adjusted EBITDA was $30 million in the second quarter compared to $32 million in the first quarter, reflecting reduced crude imports ahead of the Hawaii turnaround.

Shawn Flores
Shawn Flores
CFO at Par Pacific

In the retail segment, adjusted EBITDA was $17 million compared to $15 million in the first quarter. The sequential improvement was driven by a partial recovery in fuel margins and continued growth in food service sales in both regions. Moving to cash flow, second quarter cash from operations totaled $614 million, excluding working capital outflows of $312 million and deferred turnaround costs of $19 million. The working capital outflows were primarily driven by building refined product inventories ahead of the Hawaii turnaround and higher commodity prices, which increased the value of hydrocarbon inventories. We expect a substantial portion of these working capital outflows to reverse as inventory levels normalize after the Hawaii turnaround and commodity prices stabilize. Second quarter capital expenditures, including deferred turnaround costs, totaled approximately $59 million. During the quarter, we continued to benefit from our excess RIN inventories associated with the prior period small refinery exemptions.

Shawn Flores
Shawn Flores
CFO at Par Pacific

As a reminder, our adjusted EBITDA and adjusted net income reflect full RIN expense at current period RIN prices, which does not reflect the benefit of our excess RIN position. Our GAAP results, by contrast, include approximately $35 million gain in the quarter, representing the difference between current RIN prices and the book value of our RIN assets on our balance sheet. Shifting to the balance sheet, we completed a $500 million offering of senior unsecured notes, reducing gross term debt by more than $130 million during the quarter. We also reduced ABL borrowings by $78 million, resulting in a total net debt reduction of over $220 million. Given the heightened market volatility during the period, we moderated our opportunistic share repurchase activity in favor of strengthening the balance sheet through debt reduction.

Shawn Flores
Shawn Flores
CFO at Par Pacific

Year-to-date, through the second quarter, we have repurchased approximately $48 million of common stock, including cash-settled options. As of June 30th, total liquidity was approximately $1.4 billion and our cash balance was $185 million. Looking to the third quarter, our July consolidated refining index was $31.34 per bbl or approximately $1.60 below the Q2 average. In Hawaii, the financial impact of the refinery turnaround will be concentrated in the third quarter. Increased refined product imports are expected to hold capture below our typical guidance range. Our third quarter Hawaii crude differential is expected to land between $11.50 and $13.50 per bbl, reflecting higher freight costs and steeper backwardation. Across our mainland system, distillate margins have remained firm and seasonal demand has been strong quarter-to-date.

Shawn Flores
Shawn Flores
CFO at Par Pacific

As Richard mentioned, Montana will complete its annual coker maintenance during the third quarter, resulting in roughly $6 million-$8 million of incremental OpEx and a heavier asphalt sales mix. In renewables, we expect a gradual ramp in third-party sales volumes and earnings contribution as we restart the units following the Hawaii turnaround. Overall, the second quarter demonstrated the significant earnings power of our business in a favorable market. Our strong balance sheet and liquidity position will provide financial flexibility to invest in strategic growth opportunities while maintaining an opportunistic approach to share repurchases. This concludes our prepared remarks. Sarah will turn it back to you for the Q&A.

Operator

Thank you. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again. Please ensure that your phone is not on mute when called upon. Thank you. Your first question comes from Matthew Blair with TPH. Your line is open.

Matthew Blair
Analyst at TPH

Thank you. Good morning, and congrats on the strong results. I was hoping you could talk just a little bit more about the moving parts in Hawaii for the third quarter. You mentioned with the turnaround in July, the capture would likely be below typical guidance. I think you also mentioned that you've been building inventory. Is it reasonable to assume that you're monetizing inventory throughout July to help offset the impact of the turnaround? Also, is there any increase in OpEx from the turnaround? Finally, should we expect a timing headwind just based on quarter-to-date prices so far in Q3 in Hawaii?

Shawn Flores
Shawn Flores
CFO at Par Pacific

Matt, it's Shawn. I'll take your last one first. I think it's too early to call those sort of price lag impacts. It's really, as you know, the last month of each quarter, you look at sort of Singapore distillate prices. I think just watch September Singapore pricing relative to June once that month prices out. Then I think on capture, I sort of referred to it in the prepared remarks. We are expecting a more concentrated impact of the turnaround activities in Q3. We built refined products through imports late in Q2, but from a costing perspective, most of those imported barrels will be costed in Q3. Would expect capture to likely come in below sort of typical normalized guidance of 100%-110% because of those factors. I think on OpEx, I would say a marginal increase.

Shawn Flores
Shawn Flores
CFO at Par Pacific

Most of the expenditures incurred during the turnaround are capitalized.

Will Monteleone
Will Monteleone
President and CEO at Par Pacific

Just lower total crude throughputs, Matt, right? As you think about as the plant comes back online, you won't be at full rates for the entire quarter.

Matthew Blair
Analyst at TPH

Okay. Sounds good. Then Will, could you share any insight on the Singapore market? We have seen China refinery utilization tick up a little bit over the past month. It still is relatively low. Reports that China has been increasing product imports. Have you seen any of that? And yeah, the inventory picture in Singapore is just still at new five-year highs. What are the moving parts you're seeing in the Singapore market?

Will Monteleone
Will Monteleone
President and CEO at Par Pacific

Sure. Yeah, Matt, I think continue to watch Chinese behavior closely. Obviously, it moves month to month. I would say despite I think some announcements and potentially some increases in crude throughputs, we've not seen any material change in exports of refined product as we look in the July and even the forward planning that we've seen at least through August. Again, I think as you know, the data out of China is opaque and the best thing to do is to watch the vessel movements. I think what we're seeing is limited increases in waterborne refined exports at this point in time. Again, I think just as a reminder, we've followed the Chinese policy over the last decade and there's been a focus on internalizing their capabilities for many years. Again, I think you're seeing that behavior play out amidst this shock.

Will Monteleone
Will Monteleone
President and CEO at Par Pacific

Again, I think that internal focus is probably the primary objective. Again, I think that's something to continue to watch over the course of years rather than months. That's certainly the behavior that we're seeing.

Matthew Blair
Analyst at TPH

Great. Thanks for your comments.

Operator

Your next question comes from Alexa Breno with Goldman Sachs. Your line is open.

Alexa Breno
Alexa Breno
Analyst at Goldman Sachs

Good morning team, thanks for taking our question. Are you able to give us any more color on the Hawaii turnaround? Sounds like from an operational perspective, it's tracking. Anything that surprised upside, downside? On the substantially complete piece, what specific units are left, and any thoughts on timeline?

Richard Creamer
Richard Creamer
EVP of Refining and Logistics at Par Pacific

Sure, Alexa, this is Richard. The turnaround was scheduled for 30-45 days, 30 being the return of some of the early equipment. We followed pretty well on track with that with the crude unit and reforming unit to produce gasoline on that 30-day window. Out on the outer edge of that, the 45-day window is really centered around the hydrocracker. The mechanical work is completed on it's in the middle of catalyst activation and startup at this point. That's the status of the major equipment. The cost and schedule all came in close range to target. No significant issues there.

Alexa Breno
Alexa Breno
Analyst at Goldman Sachs

That's helpful. Just a follow-up. Can you talk about your latest thoughts on capital allocation priorities, whether that be around capital returns or potential for any thoughts on M&A or any other considerations?

Will Monteleone
Will Monteleone
President and CEO at Par Pacific

Sure, Alexa, it's Will. I think what I'd say on capital allocation is it continues to be dynamic. I think our past history really is a pretty good indicator of the framework that we deploy. I'd say if you look back, at times we found that M&A is the most attractive capital deployment. At others you've seen us invest in growth inside the business, like in our renewable fuels project. There's been other times where we've seen the opportunity to repurchase our own shares. At attractive discounts to our view of intrinsic value. I think these opportunities, they come and go, based on many different variables. Ultimately, our focus is really just a disciplined view on creating long-term value on a per-share basis. That's really how we think about the capital allocation priorities.

Will Monteleone
Will Monteleone
President and CEO at Par Pacific

At this point in time, I think we're spending a fair amount of effort developing internal small-scale projects that I describe as kind of singles and doubles that I think give us flexibility to achieve unlevered returns that are in the low 20s for refining logistics projects. I think those are within our control. These other opportunities involve a lot of external market forces, and I think being prepared and ready to move is a significant strategic asset. I think our historical framework is the best thing to look at and guides the way we think about the future.

Alexa Breno
Alexa Breno
Analyst at Goldman Sachs

Appreciate the color. We'll turn it back.

Operator

Once again, if you have a question, it is star one on your telephone keypad. Your next question comes from Jason Gabelman with TD Cowen. Your line is open.

Jason Gabelman
Jason Gabelman
Analyst at TD Cowen

Yeah. Hey. Thanks for taking my questions. I was hoping to get an update on how much of the NOL is left. When do you expect that to be exhausted, just given the very strong earnings we've seen, and then updated guidance on where tax rate can go once that is exhausted?

Shawn Flores
Shawn Flores
CFO at Par Pacific

Hey, Jason, it's Shawn. Yeah, I'd say the beginning point, at the end of the year, our NOL balance was around $700 million. Just given the year-to-date performance, I would expect to utilize a substantial portion of that NOL this year. I think if current margins persist, we'll likely transition to a more typical federal tax position beginning in 2027.

Jason Gabelman
Jason Gabelman
Analyst at TD Cowen

Okay. Understood. Maybe was hoping to get your updated thoughts around small refinery exemptions. Any kind of sense on when you can expect to hear on your 2025 petitions and outlook for what that could do from a cash standpoint?

Will Monteleone
Will Monteleone
President and CEO at Par Pacific

Sure. Jason. I think any specific dates would be complete speculation, as you guys know, just kind of watching this. There's deadlines, there's legal obligations, all those things rarely seem to be binding on behalf of the EPA. I think that the key date we're watching is clearly there's a September 1st compliance deadline for 2025. It's early August, we would certainly hope to hear with adequate time ahead of that compliance deadline. As a reminder, we're in a favorable position with respect to the 2025 RIN positioning at this juncture. I'll let Shawn go into the dollar magnitudes based on different scenarios for your benefit. Jason, our mainland RVO is about 140 million RIN units for 2025.

Shawn Flores
Shawn Flores
CFO at Par Pacific

A full exemption at all three of our refineries and at current RIN prices would be about $300 million, a partial exemption would be half of that.

Jason Gabelman
Jason Gabelman
Analyst at TD Cowen

Got it. Maybe if I could just ask a follow-up on the Hawaii turnaround and kind of the outlook. I know you mentioned some of the working capital headwind in 2Q was related to Hawaii. Was hoping you could disclose around what proportion of the headwind we should expect to come back once Hawaii comes back online. And then based on what you're seeing in the market, do you anticipate landed crude costs to normalize beyond 3Q?

Shawn Flores
Shawn Flores
CFO at Par Pacific

Yeah, Jason, I'll take the first one. I would say roughly half of the outflow this quarter was directly related to building up refined product inventories in Hawaii. I think the balance is mostly related to just higher flat price and inventory values. Will, you want to cover the crude deal?

Will Monteleone
Will Monteleone
President and CEO at Par Pacific

Yeah, Jason, I think the waterborne crude market's been volatile, as you can imagine. We've seen, I think as probably your best proxy to think about this is, amidst kind of the peak concerns on crude supply, we saw ANS for June crude deliveries, so these would have traded in kind of the April-May timeframe, trade as high as ICE Brent +$18.

Will Monteleone
Will Monteleone
President and CEO at Par Pacific

The moment that the straits appeared to be opening, and did open for periods of time, we saw substantial excess waterborne crude available, and the ANS deliveries or September delivery dropped to -6%. You can see it's almost a $25 a barrel swing in the span of three months in terms of crude delivery and, I think expresses the kind of volatility we're seeing. That said, I would just comment that at this point, despite the conflict re-intensifying, we're not seeing crude differentials at peak levels like it was in the early stage of the conflict in the kind of March-April timeframe, in the current market environment.

Jason Gabelman
Jason Gabelman
Analyst at TD Cowen

All right. Thanks for that, caller. I'll turn it back.

Operator

This concludes the question and answer session. I will now turn the call over to Will for closing remarks.

Will Monteleone
Will Monteleone
President and CEO at Par Pacific

Great. This quarter represents an example of what strong execution can deliver against a favorable market backdrop. Looking forward, our focus remains on disciplined execution as the durable path to growing earnings and free cash flow per share over time. Thank you to the entire Par Pacific team for your focused efforts throughout the quarter, and thank you all for joining us today.

Operator

This concludes today's conference call. Thank you for joining. You may now disconnect.

Executives
    • Jeff Hollis
      Jeff Hollis
      SVP, General Counsel, and Secretary
    • Will Monteleone
      Will Monteleone
      President and CEO
    • Richard Creamer
      Richard Creamer
      EVP of Refining and Logistics
    • Shawn Flores
      Shawn Flores
      CFO
Analysts
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