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| 8-K - 8-K - PAR PACIFIC HOLDINGS, INC. | a2017-11x8investorpresenta.htm |
Investor Presentation
November 2017
2
Forward-Looking Statements / Disclaimers
The information contained in this presentation has been prepared to assist you in making your own evaluation of the company and does not purport to contain all of the
information you may consider important. Any estimates or projections with respect to future performance have been provided to assist you in your evaluation but
should not be relied upon as an accurate representation of future results. Certain statements, estimates and financial information contained in this presentation
constitute forward-‐looking statements.
Such forward-looking statements involve known and unknown risks and uncertainties that could cause actual events or results to differ materially from the results
implied or expressed in such forward-‐looking statements. While presented with numerical specificity, certain forward-looking statements are based (1) upon assumptions
that are inherently subject to significant business, economic, regulatory, environmental, seasonal and competitive uncertainties, contingencies and risks including,
without limitation, our ability to maintain adequate liquidity, to realize the potential benefit of our net operating loss tax carryforwards, to obtain sufficient debt and
equity financings, our capital costs, well production performance, and operating costs, anticipated commodity pricing, differentials or crack spreads, anticipated or
projected pricing information related to oil, NGLs, and natural gas, realize the potential benefits of our supply and offtake agreements, assumptions inherent in a sum-of-
the-parts valuation of our business, our ability to realize the benefit of our investment in Laramie Energy, LLC, assumptions related to our investment in Laramie Energy, LLC,
including completion activity and projected capital contributions, Laramie Energy, LLC’s financial and operational performance and plans for 2017, the potential uplift of an
MLP, our ability to meet environmental and regulatory requirements, our ability to increase refinery throughput and profitability, our ability to evaluate and pursue strategic
and growth opportunities, our estimates of 2017 on-island sales volumes, our estimates related to 2017 Adjusted EBITDA, estimates regarding our anticipated diesel
hydrotreater project, including costs, timing, and benefits, anticipated retail store openings in 2018, anticipated 2019 throughput, production costs, and on-island sales
expectations in Hawaii, anticipated 2019 throughput and distillate yield expectations in Wyoming, and certain other financial measures, our estimates related to the annual
gross margin impact of changes in RINs prices, and other known and unknown risks (all of which are difficult to predict and many of which are beyond the company's control),
some of which are further discussed in the company’s periodic and other filings with the SEC and (2) upon assumptions with respect to future business decisions that are
subject to change.
There can be no assurance that the results implied or expressed in such forward-looking statements or the underlying assumptions will be realized and that actual results of
operations or future events will not be materially different from the results implied or expressed in such forward-looking statements. Under no circumstances should the
inclusion of the forward-looking statements be regarded as a representation, undertaking, warranty or prediction by the company or any other person with respect to the
accuracy thereof or the accuracy of the underlying assumptions, or that the company will achieve or is likely to achieve any particular results. The forward-looking
statements are made as of the date hereof and the company disclaims any intent or obligation to update publicly or to revise any of the forward-looking statements,
whether as a result of new information, future events or otherwise, except as may be required by applicable law. Recipients are cautioned that forward-looking statements
are not guarantees of future performance and, accordingly, recipients are expressly cautioned not to put undue reliance on forward-looking statements due to the inherent
uncertainty therein.
This presentation contains non-GAAP financial measures, such as Adjusted EBITDA, Adjusted Net Income (loss), Laramie Energy Adjusted EBITDAX, and PV10/PV20. Please
see the Appendix for the definitions and reconciliations to GAAP of the non-GAAP financial measures that are based on reconcilable historical information.
Cautionary Note
Regarding Hydrocarbon Quantities
The Securities and Exchange Commission (“SEC”) permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable, and possible reserve
estimates. We have provided Laramie Energy, LLC (“Laramie”) internally generated estimates for proved and probable reserve estimates (collectively, “2P”) in this
presentation in accordance with SEC guidelines and definitions. The 2P reserve estimates as of December 31, 2016 included in this presentation have been prepared by
Laramie’s internal reserve engineers and have not been reviewed or audited by Laramie’s independent reserve engineers. Actual quantities that may be ultimately
recovered from Laramie’s interests may differ substantially from the estimates in this presentation. Factors affecting ultimate recovery include the scope of Laramie’s
ongoing drilling program, which is directly affected by commodity prices, the availability of capital, drilling and production costs, the availability of drilling services and
equipment, drilling results, lease expirations, transportation constraints, regulatory approvals and other factors; and actual drilling results, including geological and
mechanical factors and recovery rates.
3
Our Business Platforms
Retail - Distributor and Marketer of Refined Products
Gasoline and diesel marketed through 91 locations across Hawaii
Exclusive provider of 76 branded outlets in Hawaii
Launched Hele, a local brand, with 39 stores rebranded to date
Competitive Natural Gas Producer – Laramie Energy (2)
Deep inventory of economic drilling locations
Cash operating costs competitive with low cost basins in the U.S.
Favorable exposure to improving NGL markets
Access to takeaway capacity to multiple end markets
A
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Ac
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y
____________________
(1) As measured by Nelson Complexity rating.
(2) Par Pacific owns 42.3% of Laramie Energy, LLC
Hawaii Refinery
94,000 bpd 5.7 complexity refinery (1)
50% distillate yield configuration
Crudes sourced globally
Wyoming Refinery
18,000 bpd 11.0 complexity refinery (1)
95% light products yield
Tailored for Powder River Basin & Bakken
crude
Hawaii
Storage capacity of 5.4 million barrels
with 27 mile pipeline
3 barges deliver products to 8 refined
product terminals
Wyoming
140 miles of crude oil gathering systems
40 miles of refined products pipeline
Approximately 650 thousand barrels of
storage capacity
Refining
Logistics
Retail
Laramie Energy
4
Corporate Strategy
Build Existing
Businesses
> Bolt-on acquisitions
> Selective capital projects
> Continuous business
improvement
Acquire Similar
Businesses
> Energy and infrastructure
businesses
Maintain Diverse
Earnings Profile
> Decrease commodity
price volatility
> Enhanced credit profile
Leverage Tax
Attributes
Grow Adjusted EPS and Free Cash Flow
5
Financial Summary
Enterprise Value (4)
(1) See Appendix for Non-GAAP reconciliation.
(2) Free Cash Flow is defined as cash provided by (used in) operations minus capital expenditures. See Appendix for Non-GAAP reconciliation.
(3) Net debt to total capitalization is defined as (i) principal amount of debt minus cash (“Net debt”), divided by (ii) Net debt plus stockholder’s equity.
(4) Closing stock price as of November 6, 2017. 45,778,788 shares of common stock outstanding; principal amount of debt & cash amounts in millions as of September 30, 2017.
Net Debt to Total Cap (3)
Strong free cash flow over last four quarters
Adjusted EPS (1) Free Cash Flow $MM (2)
LTM Adjusted EPS $1.48 LTM Free Cash Flow $97.4MM Long- term target of 30-35%
Closing Share Price
Shares Outstanding
Market Capitalization
Principal Amount of Debt
Cash
Net Debt
Total Enterprise Value
45.8
$969
353
275
$1,244
(78)
$21.16
6
Business Segment Profile
____________________
(1) Percentage of total segment Adjusted EBITDA excluding corporate and other.
(2) Represents Par Pacific’s 42.3% share of Laramie Energy.
Diversified downstream businesses
Large unrestricted tax asset of $1.6 billion
E&P diversification with 42.3% ownership of Laramie Energy
Retail and logistics segments currently 39% of LTM Adjusted EBITDA(1)
Investment Book Value ($MM)
2017 Exit Production (MMcfe/d)
(2)
$120
67-72
7
Refining Unit Capacity (MBPD)
Crude Unit 94
Vacuum Distillation Unit 40
Hydrocracker 18
Catalytic Reformer 13
Visbreaker 11
Hydrogen Plant (MMCFD) 18
Naphtha Hydrotreater 13
Cogeneration Turbine Unit 20 MW
Hawaii Refinery
Asset Highlights
Largest and most complex refinery in Hawaii
Distillate yield configured for Hawaii demand
$27MM diesel hydrotreater project anticipated to
increase distillate production 5-7Mbpd; estimated
completion 4Q 2019
Asset location and configuration favorably positioned to
benefit from commercial flexibility
Anticipated ability to meet environmental and regulatory
requirements without material capital expenditures
Asset Detail
YTD 2017 Crude Sourcing
Product Yield
8
Mid Pac acquisition
increased on-island
sales
Improved
mechanical
reliability
Hawaii Business Strategy
At Acquisition – September 2013
60,000 BPD throughput
45,000 BPD on-island sales
35% fuel oil yield
Middle East crude slate
$5.00/bbl production cost
As of 3Q 2017
74,000 BPD throughput
64,000 BPD on-island sales
16% fuel oil yield
Balanced opportunistic crude slate
$3.69/bbl production cost
2019 Goals
83,000 BPD throughput
70,000 BPD on-island sales
15% fuel oil yield
$3.00/bbl production cost
Reduce distillate imports
Creative working
capital solution
Aggressive in-state
commercial
strategy
Improve crude
selection
$27MM distillate
hydrotreater
project
9
Wyoming Refinery
Refinery Operations
YTD 2017 Yield Profile Refinery Asset Detail
Refining Unit Capacity (MBPD)
Crude Unit 18
Residual Fluid Catalytic Cracker 7
Catalytic Reformer 3
Alkylation 1
Naphtha Hydrotreater 3
Diesel Hydrotreater 6
Isomerization 4
18,000 bpd refinery in Newcastle, Wyoming
Complex refinery with a Nelson Complexity Index
of 11.0
Completed isomerization project in the second half
of 2016 to drive additional value
Flexible product yield
Attractive light products yield over 95% during
2017
YTD 2017 Crude Sourcing
10
Increased sales
contracts
Wyoming Business Strategy
At Acquisition – July 2016
15,000 BPD throughput
41% distillate yield
2019 Goals
Expanded commercial market
Increased throughput
54+% distillate yield
Added planning
and economic
group
Upgrade diesel
hydrotreater to
increase distillate
Out of market
commercial
strategy
Review expanding
crude supply reach
Refined products
transported by rail
Logistics Segment
12
Hawaii Assets Map Asset Highlights
Hawaii Logistics
Integrated system enhances flexibility and profitability
Difficult to replicate asset base
Multiple advantages from single point mooring
Increased safety and flexibility
Enhanced distribution capability
Latin America
South America
North America
Middle East
Africa
Asia
Logistics network represents a critical component of Hawaii operations
Asset Detail
Number of Terminals 8
Crude Storage Capacity (MMBbls) 2.4
Other Storage Capacity (MMBbls) 3.0
Number of Barges 3
Miles of Pipeline 27
Refinery
Terminal Crude Inflows
Crude Refined Products
Outflows
13
Wyoming Logistics
Logistics Assets
Well-positioned to benefit from regional development
____________________
(1) Source: Baker Hughes North American Rig Count as of November 6, 2017.
140-mile crude oil pipeline gathering
system providing direct access to Powder
River Basin crude
40-mile products pipeline feeds into
Magellan Products Line en route to Rapid
City, South Dakota
Jet fuel terminal in Rapid City and
pipeline connecting to the Ellsworth Air
Force Base
650 Mbls of crude and refined product
tankage with expansion opportunities
identified
Truck racks and a loading facility at the
refinery
9 rigs operating in the Powder River
Basin as of November 6, 2017(1)
Retail Segment
15
Retail
Highlights
Extensive footprint across five islands in Hawaii
Non-fuel sales up 4.5% on a same store, year-
over-year basis during the third quarter of 2017
New store opening in 2018
Attractive fee owned real estate portfolio
Retail Network
High real estate cost, scarcity of land, and logistics complexity strengthen competitive position
Location "76" Brand Hele Brand Unbranded Total
Oahu 29 29 3 61
Big Island 6 6 0 12
Maui 3 4 0 7
Kauai 3 0 8 11
Total locations 41 39 11 91
Laramie Energy
17
Asset Highlights
Laramie Energy
____________________
(1) Figures for 100% of Laramie Energy based upon 2017 and 2018 two rig staggered capital plan.
(2) 2016 unit costs were $1.72/Mcfe.
6,500+ Mesa Verde drilling locations over 150,000 net
acres, 81% held by production
More than 75% of existing gas production hedged
through December 2018; more than 25% of existing
propane production hedged through December 2017
Targeting EURs of 1.7 – 2.0 Bcfe with drilling and
completion costs of approximately $0.9MM
Unit Costs Reduction(2) 2017 Plans
Anticipated completions and production growth
weighted to back half of 2017
Anticipated production growth range of 14% to 21%
for 2017 exit vs. 2016 exit based upon staggered 2 rig
program
Expect to fund outspend of hedged 2017 cash flow
based on current strip prices with revolver capacity,
while holding leverage profile at 3.0x debt / Adj.
EBITDA through 2017
Self-funded two rig program positions Laramie for production growth
Production Profile(1)
Appendix
19
Hawaii Market Fundamentals
Hawaii Air Travel(3)
____________________
(1) Source: Department of Business, Economic Development and Tourism (“DBEDT”) as of May 2017; EIA data as of May 2017, including military demand per Par Pacific internal estimates.
(2) Source: U.S. Department of Transportation .
(3) Source: Number of visitors per DBEDT.
Hawaii Refined Product Demand(1)
Shortage of available distillate capacity in Hawaii
Air travel to and from Hawaii projected to continue to grow Fuel oil utilized for ~70% of electricity generation
(In Thousands)
Hawaii Petroleum Use(1)
MBbl/d Total Production
Total Demand
[CATEGORY
NAME]
Other
Renewables
Coal-Fired
69%
18%
13%
60 61
70
51
0
8
16
24
32
40
48
56
64
72
80
Other Products Distillate
Growth Year Over Year
Hawaii Miles Driven(2)
20
Mid Pacific Crack Spread and Crude Differential
____________________
(1) Company calculation based on a rolling five-year average for the 4-1-2-1 Mid Pacific Crack Spread plus Mid Pacific Crude Differential
Mid Pacific Crude Differential is calculated as follows: 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.
Mid Pacific 4.1.2.1 Crack Spread is calculated as follows: Singapore Daily: computed by taking 1 part gasoline (RON 92), 2 parts middle distillates (Sing Jet & Sing Gasoil), and 1 part fuel oil (Sing 180) as created from four
barrels of Brent Crude. San Francisco Daily: computed by taking 1 part gasoline (SF Reg Unl), 2 parts middle distillates (SF Jet 54 & SF ULSD), and 1 part fuel oil (SF 180 Waterborne) as created from four barrels of Brent Crude.
Daily: computed using a weighted average of 80% Singapore and 20% San Francisco. Month (CMA): computed using all available pr icing days for each marker. Quarter/Year: computed using calendar day weighted CMAs for
each marker.
Mid Pacific Crude Blend
4-1-2-1 Mid Pacific Crack Spread 80% Singapore, 20% San Francisco
Combined Mid
Cycle(1)
$8.35
$(2)
$-
$2
$4
$6
$8
$10
$12
4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
Mid Pacific 4.1.2.1 $8.22 $9.09 $9.76 $7.93 $6.50 $4.48 $3.96 $4.45 $7.00 $7.69 $8.35 9.94
Mid Pacific Crude Blend $2.06 2.42 1.30 0.56 1.75 2.10 2.04 2.42 1.48 $1.21 $0.61 0.33
Brent 76.95 55.04 63.52 51.20 44.70 35.18 46.98 47.01 51.21 54.62 50.93 52.14
Combined Mid Cycle 3-Yr $8.80 $8.80 $8.80 $8.80 $8.80 $8.80 $8.80 $8.80 $8.80 $8.80 $8.80 $8.80
21
Wyoming Crack Spread
____________________
(1) Company calculation based on a rolling three year, nine month average.
Wyoming 3-2-1 Index is calculated as follows:
Rapid City Daily: Computed by taking 2 parts gasoline and 1 part distillate (ULSD) as created from a barrel of West Texas Intermediate Crude.
Denver Daily: Computed by taking 2 parts gasoline and 1 part distillate (ULSD) as created from a barrel of West Texas Intermediate Crude. Pricing is based 50% on applicable product pricing in Rapid City, South Dakota, and 50% on
applicable product pricing in Denver, Colorado.
Daily: computed using a weighted average of 50% Rapid City and 50% Denver.
Mid Cycle(1)
$20.00
22
RIN Price Sensitivity
Source: 2016 Barclay's U.S. Independent Refiners RIN Report & Company data
____________________
23
Capital Expenditures
Note: 2016 excludes the Hawaii turnaround, maintenance includes $6MM associated with completion of Wyoming Benzout project, contribution from Wyoming July 15,
2016 to December 31, 2016.
____________________
24
Corporate Structure
Par Pacific Holdings, Inc.
$210MM Revolver
$149MM drawn
$115.0 MM 5.00% Convertible
Senior Notes
due 6/15/2021
Laramie Energy, LLC
(42.3% ownership)(1)
(1) Recourse limited to pledge of equity interest of Par Piceance Energy Equity, LLC
Par Piceance Energy
Equity, LLC
Par Wyoming
Holdings, LLC
$67.3 MM L+950
Term Loan
due 7/14/2021
Par Hawaii Refining, LLC
Inventory $27.9 MM 7% J. Aron
Intermediation Forward Sale
Agreement due 5/31/2021
As of September 30, 2017
Mid Pac Petroleum, LLC / HIE Retail, LLC
$85.0 MM L+250 $5.0 MM L+250 Revolver
Term Loan due 12/17/2020
due 12/17/2022 $0 drawn
Hermes Consolidated, LLC d/b/a Wyoming Refining
Company
$48.8 MM L+300 $30.0 MM L+250 Revolver
Term Loan due 6/30/2019
due 6/30/2019 $9.5 MM drawn
____________________
25
Laramie Energy Hedging Program
Q4 2017 FY 2018
NYMEX Fixed Price Swap
Hedged Volume (MMBtu/day) 90,550 85,090
Average Floor Price ($/MMBtu) $2.65 $2.67
NYMEX Collar
Hedged Volume (MMBtu/day) 7,500 7,500
Collar ($/MMBtu) $2.92 - $3.25 $2.92 - $3.25
CIG Basis Swap
Hedged Volume (MMBtu/day) 80,550 75,090
Average CIG Differential to NYMEX ($0.26) ($0.26)
Northwest Rockies Pipeline Collar
Hedged Volume (MMBtu/day) 10,000 2,500
Collar ($/MMBtu) $3.00 - $3.25 $3.00 - $3.25
NGL Hedges
Propane (gal/day) 23,647 --
Propane ($/gal) $0.68 --
Isobutane (gal/day) 5,871 --
Isobutane ($/gal) $0.97 --
Normal butane (gal/day) 5,871 --
Normal butane ($/gal) $0.98 --
26
Year End Reserves and PV10 Summary – 100% of Laramie Energy
Laramie Energy Reserves
____________________
Note: Par Pacific Holdings owns 42.3% of Laramie Energy, LLC
Reserves information based on audit by Netherland Sewell & Associates unless otherwise noted
(1) NGLs and Oil converted to gas based on 6:1 ratio
(2) Based on NYMEX strip pricing as of December 31, 2016 held flat after five years also adjusted for NWROX basis of ($0.24). See "Non-GAAP PV10 and PV20 Disclosure" for additional discussion.
(3) Based on North West Wyoming Pool SEC pricing as of December 31, 2016 adjusted for location basis of ($0.015). See "Non-GAAP PV10 and PV20 Disclosure" for additional discussion.
(4) All PUD locations conform to SEC standards.
(5) Based on Laramie Energy, LLC internal reserves
(6) Proved reserves only
Pricing Summary
Gas Oil NGL Total PV10 PV20
(BCF) (MMBBL) (MMBBL) (BCFE)(1) ($MM) ($MM)
PDP 369 1 10 436 $253 $185
PDNP 8 0 0 10 $3 $1
PUD(4) 393 1 11 467 $82 $6
Total Proved (1P) 770 2 21 913 $338 $192
Gas Oil NGL Total PV10(2) PV20(2)
(BCF) (MMBBL) (MMBBL) (BCFE)(1) ($MM) ($MM)
PDP 392 1 10 462 $394 $292
PDNP 9 0 0 10 $5 $2
PUD(4) 424 1 12 502 $187 $69
Total Proved (1P) 824 3 22 974 $586 $364
Probable(5) 6,173 21 170 7,317 $1,674 $345
Total Proved + Probable (2P) 6,997 24 192 8,292 $2,260 $709
NYMEX Price Deck and Parameters
SEC Price Deck and Parameters
Average Price Received YE16 SEC YE16 NYMEX(6)
Oil Price ($/Bbl) $38.75 $52.05
Gas Price ($/Mcf) $2.41 $2.87
Natural Gas Liquids ($/Bbl) $14.49 $19.10
Gas Price ($/MMBTU) Condensate ($/BBL)
Average Annual Price YE16 SEC(3) YE16 NYMEX YE16 SEC YE16 NYMEX
2017 $2.29 $3.61 $42.75 $56.19
2018 $2.29 $3.14 $42.75 $56.59
2019 $2.29 $2.87 $42.75 $56.10
2020 $2.29 $2.88 $42.75 $56.05
Thereafter $2.29 $2.90 $42.75 $56.21
Assumed Pricing
27
Laramie Key Statistics
____________________
(1) Laramie Debt is non-recourse to Par Pacific and solely guaranteed by a Par Pacific subsidiary that owns Laramie Energy units.
(2) Preferred stock balance based on current Liquidation Preference amount.
(3) Based on two rig staggered capital plan.
(4) See Appendix for Non-GAAP reconciliation of Laramie Adjusted EBITDAX to the most directly comparable GAAP financial measure.
28
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MESA
RIO BLANCO
GARFIELD
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Battlement Mesal tt tle en esal l tt ttt tle en esal le en esa
Palisadelialisadelilialisadelialisade
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Laramie Energy Acreage
810415_1.w or - NY008HT3
Adams
Elbert
Lake
Eagle
Pitkin
Weld
Jackson
Garfield
Rio Blanco
Costilla
Las Animas
Moffat
Routt
Lincoln
Washington
Kiowa
BentOtero
Pueblo
Custer
Huerfano
Alamosa
Rio Grande
Hinsdale
Ouray
San Juan
San Miguel
La Plata
Dolores
Montezuma
Montrose
Delta
Chaffee
Gunnison
Mesa
Nebraskarrreb aska
New Mexico i i ie exico i
Wyomingiiiyo ingi
Coloradol rll rrolo adol
Utahtttah
Denver
Cheyenne
Arapahoe
Archuleta
Baca
Boulder
Cheyenne
Conejos
Crowley
El Paso
Fremont
Grand
Kit Carson
Larimer
Logan
Mineral
Morgan
Park
Phill ips
Prowers
Saguache
Sedgwick
Teller
Yuma
Colorado
All of Laramie's acreage is located in Rio Blanco,
Garfield and Mesa Counties, Colorado
North Area - Rio Blanco County
Central Area - Garfield County
South Area - Collbran, Mesa County
Over 23,000 net mineral acres
Over 26,000 fee surface acres
Laramie’s
Core
Acreage
North Central South Lease Acreage:
70
70 Garfield Mesa Rio Blanco
Net Co. Net Net Co. Net Net Co. Net %
2016 280 280 1,553 1,547 0 0 1.3%
2017 242 242 2,115 2,115 0 0 1.7%
2018 0 0 0 0 480 480 0.4%
2019 0 0 3 3 2,286 457 0.3%
2020 3,712 742 97 97 80 16 0.6%
Totals 4,234 1,264 3,768 3,762 2,846 953 4.4%
Acreage Expiration Summary
29
Laramie Energy Adjusted EBITDAX
2017 2016
Net income (loss) (1,838) 5,056
Commodity derivative (gains)/losses (945) (11,743)
Losses on settled derivative instruments (1,413) (924)
Interest expense 1,812 1,138
Non-cash preferred dividend 1,065 946
Depreciation, depletion, amortization, and accretion 12,630 13,865
Exploration and geological and geographical expense 90 29
Bonus (payment) accrual, net 799 663
Equity based compensation expense 1,669 1,604
Loss (gain) on disposal of assets 105 (375)
Expired acreage (non-cash) 387 -
Total adjusted EBITDAX $14,361 $10,259
Three months ended September 30,
($ in thousands)
30
Non-GAAP PV10 and PV20 Disclosure
Non-GAAP PV10 and PV20 Disclosure
PV10 and PV20 are considered non-GAAP financial measures under SEC regulations because they do not include the effects of
future income taxes, as is required in computing the standardized measure of discounted future net cash flows. However, our
PV10/PV20 and our standardized measure of discounted future net cash flows are equivalent as we do not project to be taxable
or pay cash income taxes based on our available tax assets and additional tax assets generated in the development of reserves
because the tax basis of our oil and gas properties and NOL carryforwards exceeds the amount of discounted future net
earnings. PV10/PV20 should not be considered a substitute for, or superior to, measures prepared in accordance with U.S.
generally accepted accounting principles. We believe that PV10 and PV20 are important measures that can be used to evaluate
the relative significance of our natural gas and oil properties to other companies and that PV10 and PV20 are widely used by
securities analysts and investors when evaluating oil and gas companies. PV10 and PV20 computed on the same basis as the
standardized measure of discounted future net cash flows but without deducting income taxes.
31
Non-GAAP Financial Measures
Consolidated Adjusted EBITDA and Adjusted Net Income (Loss) Reconciliation (1)
($ in thousands, except per share data)
_____________________________________________
(1) We believe Adjusted Net Income (Loss), Adjusted EBITDA, and Adjusted Net Income (Loss) per diluted share are useful supplemental financial measures that allow
investors to assess: (1) The financial performance of our assets without regard to financing methods, capital structure or historical cost basis. (2) The ability of our
assets to generate cash to pay interest on our indebtedness, and (3) Our operating performance and return on invested capital as compared to other companies
without regard to financing methods and capital structure. Adjusted Net Income (Loss), Adjusted EBITDA, and Adjusted Net Income (Loss) per diluted share should not
be considered in isolation or as a substitute for operating income (loss), net income (loss), cash flows provided by operating, investing and financing activities, or
other income or cash flow statement data prepared in accordance with GAAP. Adjusted Net Income (Loss), Adjusted EBITDA, and Adjusted Net Income (Loss) per
diluted share presented by other companies may not be comparable to our presentation as other companies may define these terms differently.
2016 2017
Q2 Q3 Q4 Q1 Q2 Q3
Net income (loss) $ (13,088 ) $ (27,761 ) $ 13,687 $ 27,786 $ 7,006 $ 18,824
Adjustments to Net income (loss):
Inventory valuation adjustment (1,059 ) 7,324 516 (8,792 ) (2,620 ) 9,423
Unrealized loss (gain) on derivatives (8,406 ) 1,117 (5,737 ) (1,287 ) 4,399 (3,033 )
Acquisition and integration expense 845 2,047 1,731 253 — —
Increase in (release of) tax valuation allowance (8,573 ) — — — — —
Loss on termination of financing agreements — — — — 1,804 —
Change in value of common stock warrants (1,176 ) (657 ) 515 689 547 975
Change in value of contingent consideration (3,552 ) (1,025 ) (17 ) — — —
Severance costs — 105 — 1,595 — —
Adjusted Net Income (loss) (35,009 ) (18,850 ) 10,695 20,244 11,136 26,189
Depreciation, depletion and amortization 5,100 9,643 11,778 11,260 11,284 11,304
Interest expense and financing costs, net 6,106 11,232 6,555 8,942 9,139 7,419
Equity losses (earnings) from Laramie Energy, LLC 16,948 (3,659 ) 7,222 (8,746 ) (2,352 ) (553 )
Income tax expense (benefit) 89 30 205 648 414 700
Adjusted EBITDA $ (6,766 ) $ (1,604 ) $ 36,455 $ 32,348 $ 29,621 $ 45,059
Adjusted Net Income (loss) $ (35,009 ) $ (18,850 ) $ 10,695 $ 20,244 $ 11,136 $ 26,189
Effect of convertible and participating securities — — (105 ) 2,291 (144 ) 2,234
Numerator for diluted Adjusted Net Income
(loss) per share $ (35,009 ) $ (18,850 ) $ 10,590 $ 22,535 $ 10,992 $ 28,423
Diluted weighted-average shares outstanding 41,015 41,580 45,426 51,865 — 45,564 51,992
Adjusted Net Income (loss) per diluted share $ (0.85 ) $ (0.45 ) $ 0.23 $ 0.43 $ 0.24 $ 0.55
32
Non-GAAP Financial Measures
Consolidated Adjusted EBITDA and Adjusted Net Income (Loss) Reconciliation (1)
For the twelve months ended September 30, 2017
($ in thousands, except per share data)
_____________________________________________
(1) Refer to description of Adjusted Net Income (Loss), Adjusted EBITDA and Adjusted Net Income (Loss) per diluted share on the previous slide.
Net income $ 67,303
Adjustments to Net income:
Inventory valuation adjustment (1,473 )
Unrealized gain on derivatives (5,658 )
Acquisition and integration expense 1,984
Loss on termination of financing agreements 1,804
Change in value of common stock warrants 2,726
Change in value of contingent consideration (17 )
Severance costs 1,595
Adjusted Net Income 68,264
Depreciation, depletion and amortization 45,626
Interest expense and financing costs, net 32,055
Equity losses (earnings) from Laramie Energy, LLC (4,429 )
Income tax expense 1,967
Adjusted EBITDA $ 143,483
Adjusted Net Income (loss) $ 68,264
Effect of convertible and participating securities (790 )
Numerator for diluted Adjusted Net Income (loss) per share $ 67,474
Diluted weighted-average shares outstanding 45,502
Adjusted Net Income (loss) per diluted share $ 1.48
33
Non-GAAP Financial Measures
Consolidated Adjusted EBITDA by Segment Reconciliation (1)
For the twelve months ended September 30, 2017
($ in thousands)
Refining Logistics Retail
Corporate,
Texadian and
Other
Operating income (loss) $ 89,817 $ 35,651 $ 25,651 $ (49,710 )
Adjustments to operating income (loss):
Unrealized loss (gain) on derivatives (5,320 ) — — (338 )
Acquisition and integration expense — — — 1,984
Inventory valuation adjustment (1,473 ) — — —
Depreciation, depletion and amortization 30,159 6,176 5,819 3,472
Severance costs 395 — — 1,200
Adjusted EBITDA $ 113,578 $ 41,827 $ 31,470 $ (43,392 )
_____________________________________________
(1) Adjusted EBITDA by segment is defined as operating income (loss) by segment excluding unrealized (gains) losses on derivatives, inventory valuation
adjustment, acquisition and integration expense, severance costs, depreciation, depletion and amortization expense. We believe Adjusted EBITDA by
segment is a useful supplemental financial measure to evaluate the economic performance of our segments without regard to financing methods,
capital structure or historical cost basis. Adjusted EBITDA by segment presented by other companies may not be comparable to our presentation as
other companies may define these terms differently.
34
Non-GAAP Financial Measures
Free Cash Flow (1)
($ in thousands)
2016 2017
Q2 Q3 Q4 Q1 Q2 Q3
Cash provided by (used in) operations $ (40,835 ) $ (12,442 ) $ 17,357 $ 24,995 $ 37,202 $ 43,259
Less: Capital Expenditures 7,215 7,585 5,557 7,579 4,198 8,111
Free Cash Flow $ (48,050 ) $ (20,027 ) $ 11,800 $ 17,416 $ 33,004 $ 35,148
_____________________________________________
(1) Free Cash Flow is defined as cash provided by (used in) operations less capital expenditures. We believe Free Cash Flow is a useful supplemental financial
measure to evaluate our ability to generate cash to repay our indebtedness or make discretionary investments. Free Cash Flow should be considered in
addition to, rather than as a substitute for, net income as a measure of our financial performance and net cash provided by (used in) operations as a measure
of our liquidity. Free Cash Flow presented by other companies may not be comparable to our presentation as other companies may define these terms
differently.