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Inventory Financing Agreements | 9 Months Ended
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Sep. 30, 2024
Other Commitments [Abstract] |
Inventory Financing Agreements | Inventory Financing Agreements The following table summarizes our outstanding obligations under our inventory financing agreements (in thousands):
| September 30, 2024 |  | December 31, 2023
Inventory Intermediation Agreement | $ | 165,168 |  |  | $ | — |
Supply and Offtake Agreement | — |  |  | 594,362 |
LC Facility due 2024 | — |  |  | — |
Obligations under inventory financing agreements | $ | 165,168 |  |  | $ | 594,362 |
Inventory Intermediation Agreement On May 31, 2024, Par Hawaii Refining, LLC (“PHR“), our wholly owned subsidiary, entered into an inventory intermediation agreement with Citigroup Energy Inc. (“Citi”) (the “Inventory Intermediation Agreement”) to support our Hawaii refining operations. Pursuant to the Inventory Intermediation Agreement, Citi will finance and hold title to crude oil in storage tanks and certain crude oil in transit to be consumed by PHR’s refinery located in Kapolei, Hawaii (the “Hawaii Refinery”). In connection with the Inventory Intermediation Agreement, Citi will enter into certain hedging transactions, in each case, on terms and subject to conditions set forth in the Inventory Intermediation Agreement. The net cash proceeds of $203.1 million, presented as Proceeds from inventory financing agreements in our condensed consolidated statement of cash flows, were used to settle a portion of PHR’s outstanding obligations under the prior J. Aron intermediation agreement. Upon entry into the Inventory Intermediation Agreement, Citi purchased from PHR all the crude oil held in its Hawaii storage tanks. Though title resides with Citi, the Inventory Intermediation Agreement is accounted for similar to a product financing arrangement and the crude oil inventories will continue to be included in our consolidated balance sheets until processed and sold to a third party. Monthly, we record a liability in an amount equal to the amount we expect to pay to repurchase the inventory held by Citi as, following expiration or termination of the Inventory Intermediation Agreement, we are obligated to purchase the crude oil then-owned by Citi at then-current market prices. The Inventory Intermediation Agreement has a term of three years with a one-year extension option upon mutual agreement. Par Petroleum, LLC, a wholly owned subsidiary, guarantees PHR’s obligations under the Inventory Intermediation Agreement and certain other related agreements pursuant to an unsecured guaranty. In connection with the Inventory Intermediation Agreement, on May 31, 2024, PHR entered into a pledge and security agreement with Citi, which grants Citi a security interest on certain collateral to secure the obligations of PHR under the Inventory Intermediation Agreement. The Inventory Intermediation Agreement also requires PHR to comply with certain covenants that restrict PHR’s ability to take certain actions, including certain limitations on PHR’s ability to incur debt and grant liens. Supply and Offtake Agreement Prior to May 31, 2024, we had a supply and offtake agreement with J. Aron & Company, LLC (“J. Aron”) to support our Hawaii refining operations (the “Supply and Offtake Agreement"). Under the Supply and Offtake Agreement, we paid or received certain fees from J. Aron based on changes in market prices over time. On May 31, 2024, the Supply and Offtake Agreement expired, the J. Aron Discretionary Draw Facility was terminated, and we entered into the Inventory Intermediation Agreement. We paid $382.1 million and $60.9 million to settle our J. Aron obligation and Discretionary Draw Facility remaining obligations, respectively. These payments are presented within Payments for termination of inventory financing agreements and Net repayments of deferred payment arrangements and receivable advances in our condensed consolidated statement of cash flows. In connection with the termination of the Supply and Offtake Agreement, we recognized termination costs of $0.2 million, which are recorded in Debt extinguishment and commitment costs on our condensed consolidated statements of operations for the nine months ended September 30, 2024. As of September 30, 2024, there were no outstanding obligations under the Supply and Offtake Agreement. LC Facility due 2024 On July 26, 2023, PHR, as borrower, the lenders and letter of credit issuing banks party thereto (collectively, the “LC Facility Lenders”), MUFG Bank, Ltd., as administrative agent (the “LC Facility Agent”), sub-collateral agent, joint lead arranger and sole bookrunner, Macquarie Bank Limited, as joint lead arranger, and U.S. Bank Trust Company, National Association, as collateral agent (the “Collateral Agent”), entered into an Uncommitted Credit Agreement (the “LC Facility Agreement”) whereby the LC Facility Lenders agreed, on an uncommitted and absolutely discretionary basis, to consider making revolving credit loans and issuing and participating in letters of credit. The LC Facility was terminated on May 31, 2024, in connection with the termination of the Supply and Offtake Agreement and entry into the Inventory Intermediation Agreement. In connection with the termination of the LC Facility, we recognized debt extinguishment costs of $0.6 million, which are included in Debt extinguishment and commitment costs on our condensed consolidated statements of operations for the nine months ended September 30, 2024. We did not have any outstanding borrowings under the LC Facility as of the termination date. The following table summarizes our outstanding borrowings, letters of credit, and contractual undertaking obligations under the intermediation agreements (in thousands):
| September 30, 2024 |  | December 31, 2023
Discretionary Draw Facility |  |  |
Outstanding borrowings (1) | $ | — |  |  | $ | 165,459 |
Borrowing capacity | — |  |  | 175,891 |
LC Facility due 2024 |  |  |
Outstanding borrowings | — |  |  | — |
Borrowing capacity | — |  |  | 120,000 |
LC Facility issued letters of credit | — |  |  | 13,000 |
______________________________________________________ (1)Borrowings outstanding under the Discretionary Draw Facility were included in Obligations under inventory financing agreements on our condensed consolidated balance sheets. Changes in the borrowings outstanding under these arrangements were included within Cash flows from financing activities on the condensed consolidated statements of cash flows. The following table summarizes the inventory intermediation fees, which are included in Cost of revenues (excluding depreciation) on our condensed consolidated statements of operations, and Interest expense and financing costs, net related to the intermediation agreements (in thousands):
|  |  |  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  |  |  | 2024 |  | 2023 |  | 2024 |  | 2023
Net fees and expenses: |  |  |  |  |  |  |  |  |  |
Inventory Intermediation Agreement |  |  |  |  |  |  |  |  |  |
Inventory intermediation fees (1) |  |  |  | $ | 5,582 |  |  | $ | — |  |  | $ | 11,618 |  |  | $ | — |
Interest expense and financing costs, net |  |  |  | 328 |  |  | — |  |  | 433 |  |  | — |
Supply and Offtake Agreement |  |  |  |  |  |  |  |  |  |
Inventory intermediation fees (1) |  |  |  | — |  |  | 15,643 |  |  | 30,918 |  |  | 42,270 |
Interest expense and financing costs, net |  |  |  | — |  |  | 2,214 |  |  | 2,872 |  |  | 5,834 |
Washington Refinery Intermediation Agreement |  |  |  |  |  |  |  |  |  |
Inventory intermediation fees |  |  |  | — |  |  | 750 |  |  | — |  |  | 2,250 |
Interest expense and financing costs, net |  |  |  | — |  |  | 3,278 |  |  | — |  |  | 9,250 |
LC Facility due 2024 |  |  |  |  |  |  |  |  |  |
Interest expense and financing costs, net |  |  |  | — |  |  | 54 |  |  | 1,142 |  |  | 54 |
___________________________________________________ (1)Inventory intermediation fees under the Inventory Intermediation Agreement include market structure fees of $4.5 million and $9.1 million for the three and nine months ended September 30, 2024, respectively. Inventory intermediation fees under the Supply and Offtake Agreement include market structure fees of $13.5 million for the nine months ended September 30, 2024 and $5.1 million and $9.3 million for the three and nine months ended September 30, 2023, respectively. There were no inventory intermediation fees under the Supply and Offtake Agreement for the three months ended September 30, 2024.

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