PAR PACIFIC HOLDINGS, INC. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - May 11, 2015

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8-K - 8-K - PAR PACIFIC HOLDINGS, INC.form8-k1q15results.htm



Par Petroleum Corporation Announces First Quarter 2015 Results

•
Net Income of $0.5 million, or $0.01 per diluted share compared to net loss of $14.6 million, or $(0.48) per share in the first quarter 2014
•
Adjusted Net Income of $11.7 million, or $0.31 per diluted share compared to a net loss of $15.9 million, or $(0.52) per share in the first quarter 2014
•
Adjusted EBITDA of $22.4 million compared to a loss of $9.1 million in the first quarter 2014

HOUSTON, May 10, 2015 – Par Petroleum Corporation (NYSE MKT: PARR) today reported first quarter 2015 net income of $0.5 million, or $0.01 per diluted share, compared to net loss of $14.6 million, or $0.48 per share in the first quarter of 2014. First quarter 2015 net income included a $10.0 million negative impact from the contingent consideration under the Tesoro agreement and revaluation of common stock warrants, compared to a gain of $4.0 million for the first quarter of 2014. Adjusted EBITDA for the first quarter was $22.4 million compared to an Adjusted EBITDA loss of $9.1 million for the first quarter of 2014.

“Increased on-island sales volume and refinery throughput have supported another positive quarter for Par Petroleum, with Adjusted EBITDA of $22.4 million. Progress continues across the board to optimize our operations, integrate the Mid Pac business and position Par for additional growth” noted Joseph Israel, Par Petroleum’s President and CEO.

Refinery operating margin was $52.3 million for the first quarter of 2015 compared to $19.1 million for the same period in 2014. For the quarter, improved Singapore and West Coast products markets generated a $9.09 per barrel 4-1-2-1 Mid Pacific crack spread, $2.25 per barrel more favorable than the first quarter of 2014 average and $0.87 per barrel more favorable than the fourth quarter of 2014. Retail fuel sales volume increased 7% to 12.2 million gallons in the first quarter of 2015 from 11.3 million gallons in the first quarter of 2014.

“Market conditions continue to be favorable in the second quarter and refinery throughput is expected to push toward the 80 Mbpd level” said Israel.



For the first quarter of 2015, net cash provided by operations totaled $86.8 million and $27.2 million of debt was repaid.  As of March 31, 2015, Par’s cash balance totaled $124.3 million, debt totaled $112.5 million and total liquidity was $206.3 million. 

Conference Call Information

A conference call is scheduled for Monday, May 11, 2015 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time). To access the call, please dial 1-877-404-9648 inside the U.S. or 1-412-902-0030 outside the U.S. and ask for the Par Petroleum call. The webcast may be accessed online through the company's website at http://www.ppetrol.com on the Investor Relations page. Please log on at least 10 minutes early to register. A telephone replay will be available through May 25, 2015 and may be accessible by calling 1-877-660-6853 inside the U.S. or 1-201-612-7415 outside the U.S. and using the conference ID 13602457#. A webcast archive will also be available at http://www.ppetrol.com shortly after the call and will be accessible for approximately 90 days.

About Par Petroleum

Par Petroleum Corporation, headquartered in Houston, Texas, is a growth-oriented integrated refiner and marketer of petroleum products. Par, through its subsidiaries, owns and operates a 94,000 bpd refinery with related logistics and retail network in Hawaii. Par also transports, markets and distributes crude oil from the Western U.S. and Canada to refining hubs in the Midwest, Gulf Coast, East Coast and to Hawaii. In addition, Par owns 34% of Piceance Energy, LLC, which has natural gas production and reserves located in the Piceance Basin of Colorado. Par's charter contains restrictions that prohibit parties from acquiring 5% or more of Par's common stock without the company's prior consent.
For more information, visit http://www.ppetrol.com.

Forward-Looking Statements

This press release includes certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements, including statements about expected market conditions and refinery throughput, are subject to certain risks, trends and uncertainties. Among those risks, trends and uncertainties are the volatility of crude oil and refined product prices; operating disruptions at the


refinery resulting from unplanned maintenance events; uncertainties inherent in estimating oil, natural gas and NGL reserves; environmental risks; and risks of political or regulatory changes. Par cannot assure that the assumptions upon which these forward-looking statements are based will prove to have been correct. Par does not intend to update or revise any forward-looking statements made herein or any other forward looking statements as a result of new information, future events or otherwise. Important risk factors that may affect the Company's business, results of operations and financial position are discussed in our most recently filed Annual Report on Form 10-K and other SEC filings.
Contact:
Christine Thorp
Director, Investor Relations
(832) 916-3396
cthorp@ppetrol.com


Consolidated Statement of Operations
(In thousands)
 
Three Months Ended March 31,
 
2015
 
2014
Revenues
 
 
 

Refining and distribution revenues
$
473,572

 
$
670,043

Retail revenues
46,719

 
51,831

Commodity marketing and logistics revenues
22,844

 
19,795

Natural gas and oil revenues
476

 
1,577

Total operating revenues
543,611

 
743,246

Operating expenses
 

 
 

Cost of revenues
477,506

 
713,084

Operating expense, excluding depreciation, depletion and amortization expense
32,280

 
33,094

Lease operating expense
1,531

 
1,024

Depreciation, depletion and amortization
3,251

 
3,061

General and administrative expense
10,125

 
4,934

Acquisition and integration expense
1,061

 
2,851

Total operating expenses
525,754

 
758,048

Operating income (loss)
17,857

 
(14,802
)
Other income (expense)
 

 
 

Interest expense and financing costs, net
(5,557
)
 
(3,507
)
Other income (expense), net
4

 
(45
)
Change in value of common stock warrants
(5,022
)
 
1,577

Change in value of contingent consideration
(4,929
)
 
2,465

Equity losses from Piceance Energy, LLC
(1,826
)
 
(221
)
Total other income (expense), net
(17,330
)
 
269

Income (loss) before income taxes
527

 
(14,533
)
Income tax expense
(65
)
 
(35
)
Net income (loss)
$
462

 
$
(14,568
)





Consolidated Adjusted Net Income (Loss) and Adjusted EBITDA
(in thousands, except per share data)
 
Three Months Ended March 31,
 
2015
 
2014
Net income (loss)
$
462

 
$
(14,568
)
Adjustments to Net income:
 
 
 
Unrealized loss (gain) on derivatives
2,406

 
(149
)
Lower of cost or market adjustment
(2,179
)
 
—

Acquisition and integration expense
1,061

 
2,851

Change in value of common stock warrants
5,022

 
(1,577
)
Change in value of contingent consideration
4,929

 
(2,465
)
(Gain) loss on sale of assets
—

 
—

Adjusted Net Income (loss)
$
11,701

 
$
(15,908
)
Depreciation, depletion and amortization
3,251

 
3,061

Interest expense and financing costs, net
5,557

 
3,507

Equity losses from Piceance Energy, LLC
1,826

 
221

Income tax expense
65

 
35

Adjusted EBITDA
$
22,400

 
$
(9,084
)
 
 
 
 
Weighted average number of shares outstanding:
 

 
 

Basic
37,188

 
30,385

Diluted
37,381

 
30,385

 
 
 
 
Income (loss) per share
 
 
 
Basic
$
0.01

 
$
(0.48
)
Diluted
$
0.01

 
$
(0.48
)
 
 
 
 
Adjusted Net Income (Loss) per share
 
 
 
Basic
$
0.31

 
$
(0.52
)
Diluted
$
0.31

 
$
(0.52
)

Balance Sheet Data
(In thousands)
 
March 31, 2015
 
December 31, 2014
Balance Sheet Data
 
 
 
Cash and cash equivalents
$
124,305

 
$
89,210

Working capital (1)
$
25,883

 
$
89,873

Debt, including current portion
$
112,499

 
$
136,610

Total stockholders' equity
$
294,065

 
$
292,159

______________
(1) Working capital is calculated as (i) total current assets, excluding cash and cash equivalents less (ii) total current liabilities, excluding current portion of long-term debt.



Operating Statistics

The following table summarizes certain operational data:
 
Three Months Ended March 31,
 
2015
 
2014
Refining and Distribution Segment
 
 
 
Total Crude Oil Throughput (Mbpd)
74.8

 
67.0

Source of Crude Oil:
 
 
 
North America
45.9
%
 
52.3
%
Latin America
13.1
%
 
29.4
%
Africa
11.4
%
 
0.3
%
Russia
20.9
%
 
5.2
%
Middle East
8.7
%
 
12.8
%
Total
100.0
%
 
100.0
%
 
 
 
 
Yield (% of total throughput)
 
 
 
     Gasoline and gasoline blendstocks
27.1
%
 
23.7
%
     Distillate
44.5
%
 
37.7
%
     Fuel oils
21.0
%
 
33.4
%
     Other products
4.5
%
 
2.3
%
          Total Yield
97.1
%
 
97.1
%
 
 
 
 
Refined product sales volume (Mbpd)
 
 
 
     On-island sales volume
60.4

 
50.2

     Exports sale volume
21.7

 
16.3

          Total refined product sales volume
82.1

 
66.5

 
 
 
 
4-1-2-1 Mid Pacific Crack Spread (1)
$9.09
 
$6.84
Mid Pacific Crude Differential (2)
$(2.42)
 
$(0.69)
Gross refining margin (in millions)
$52.3
 
$19.1
Gross refining margin per bbl ($/throughput bbl) (3)
$7.77
 
$3.17
Production costs before DD&A expense per barrel ($/throughput bbl) (4)
$4.12
 
$4.53
Net operating margin per bbl ($/throughput bbl) (5)
$3.65
 
$(1.36)
 
 
 
 
Retail Segment
 
 
 
Retail sales volumes (thousands of gallons)
12,166

 
11,336

(1) Calculated using a ratio of 80% Singapore and 20% San Francisco indexes.
(2) Weighted average differentials, excluding shipping costs, of a blend of crudes with an API of 31.98 and sulphur wt% of 0.65% that is indicative of our typical crude mix quality.
(3) Management uses gross refining margin per barrel to evaluate performance and compare profitability to other companies in the industry. There are a variety of ways to calculate gross refining margin per barrel; different companies within the industry may calculate it in different ways. We calculate gross refining margin per barrel by dividing gross refining margin (revenues less feedstocks, purchased refined products, refinery fuel burn, and transportation and distribution costs) by total refining throughput.


(4) Management uses production costs before DD&A expense per barrel to evaluate performance and compare efficiency to other companies in the industry. There are a variety of ways to calculate production cost before DD&A expense per barrel; different companies within the industry calculate it in different ways. We calculate production costs before DD&A expense per barrel by dividing all direct production costs by total refining throughput.
(5) Gross refining margin less production costs before DD&A expense.
Reconciliation of Non-GAAP Measures
Gross Margin
Below is a reconciliation of Operating income (loss) as presented in accordance with United States generally accepted accounting principles (GAAP) to Gross Margin as required under Regulation G of the Securities and Exchange Act of 1934:
 
Three Months Ended March 31,
 
2015
 
2014
Gross Margin
 
 
 
Refining and distribution
$
52,302

 
$
19,127

Retail
13,289

 
7,863

Commodity marketing and logistics
38

 
1,630

Natural gas and oil
476

 
1,542

Total gross margin
66,105

 
30,162

Operating expense, excluding depreciation, depletion, and amortization expense
32,280

 
33,094

Lease operating expense
1,531

 
1,024

Depreciation, depletion, and amortization
3,251

 
3,061

General and administrative expense
10,125

 
4,934

Acquisition and integration costs
1,061

 
2,851

Total operating expenses
48,248

 
44,964

Operating income (loss)
$
17,857

 
$
(14,802
)
Gross margin should not be considered an alternative to operating income (loss), net cash flows from operating activities, or any other measure of financial performance or liquidity presented in accordance with GAAP. Gross margin presented by other companies may not be comparable to our presentation since each company may define this term differently.


Adjusted Net Income (Loss) and Adjusted EBITDA
Below is a reconciliation of Net income (loss) as presented in accordance with GAAP to Adjusted Net Income (Loss) and Adjusted EBITDA (non-GAAP financial measures) as required under Regulation G of the Securities and Exchange Act of 1934:
 
Three Months Ended March 31,
 
2015
 
2014
Adjusted EBITDA
$
22,400

 
$
(9,084
)
Income tax expense
(65
)
 
(35
)
Equity losses from Piceance Energy, LLC
(1,826
)
 
(221
)
Interest expense and financing costs, net
(5,557
)
 
(3,507
)
Depreciation, depletion and amortization
(3,251
)
 
(3,061
)
Adjusted Net Income (loss)
11,701

 
(15,908
)
Change in value of contingent consideration
(4,929
)
 
2,465

Change in value of common stock warrants
(5,022
)
 
1,577

Acquisition and integration expense
(1,061
)
 
(2,851
)
Lower of cost or market adjustment
2,179

 
—

Unrealized (loss) gain on derivatives
(2,406
)
 
149

Net income (loss)
$
462

 
$
(14,568
)
Adjusted EBITDA and Adjusted Net Income (Loss) should not be considered in isolation or as a substitute for operating income, net income or loss, cash flows provided by operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. However, we believe Adjusted EBITDA and Adjusted Net Income (Loss) are useful supplemental financial measures 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.
Adjusted EBITDA and Adjusted Net Income (Loss) have limitations as analytical tools and should not be considered alternatives to net income, operating income, cash flow from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA and Adjusted Net Income (Loss) exclude some, but not all, items that affect net income and operating income and these measures may vary among other companies. Limitations to using Adjusted EBITDA and Adjusted Net Income (Loss) as analytical tools include:
•
Adjusted EBITDA does not reflect the company's current or future requirements for capital expenditures or capital commitments;


•
Adjusted EBITDA does not reflect changes in, or cash requirements necessary to service interest or principal payments on, the company's debt;
•
Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements;
•
Adjusted Net Income (Loss) excludes certain charges that are likely to recur in the future; and
•
Other companies may calculate Adjusted EBITDA and Adjusted Net Income (Loss) differently than we do, limiting its usefulness as a comparative measure.


PAR PACIFIC HOLDINGS, INC. Reports