Refining and Logistics Equity Investments

12 Months Ended

Dec. 31, 2024

Equity Method Investments and Joint Ventures [Abstract]

Refining and Logistics Equity Investments

Note 3—Refining and Logistics Equity Investments

Yellowstone Energy Limited Partnership

On June 1, 2023, we completed the Billings Acquisition (as defined in Note 5—Acquisitions) and acquired a 65% limited partnership ownership interest in YELP. YELP owns a cogeneration facility in Billings, Montana, that converts petroleum coke, supplied from our Montana refinery and other nearby third-party refineries, into power production for the local utility grid. We account for our investment in YELP using the equity method as we have the ability to exert significant influence over, but do not control, its operating and financial policies. Our proportionate share of YELP’s net income and the depreciation of our basis difference are included in Equity earnings from refining and logistics investments on our consolidated statements of operations due to the significance of YELP’s cogeneration facilities to our Montana operations and reported as

part of our refining segment. Please read Note 23—Segment Information for further information on our reporting segments. Our proportionate share of YELP’s net income (loss) is recorded on a one-month lag.

The change in our equity investment in YELP is as follows (in thousands):


	Year Ended December 31,
	2024		2023
Beginning balance	$	59,824	$	—
Acquisition of investment	—		58,019
Equity earnings from YELP	5,055		8,059
Depreciation of basis difference	(1,392)		(696)

Dividends received	(6,320)		(5,558)

Ending balance	$	57,167	$	59,824

Yellowstone Pipeline Company

On June 1, 2023, we completed the Billings Acquisition (as defined in Note 5—Acquisitions) and acquired a 40% ownership interest in YPLC. YPLC owns a refined products pipeline that begins at our Montana refinery and transports refined product throughout Montana and the Pacific Northwest (“PNW”). We account for our ownership interest in YPLC using the equity method as we have the ability to exert significant influence over, but do not control, its operating and financial policies. Our proportionate share of YPLC’s net income and the accretion of our basis difference is included in Equity earnings from refining and logistics investments on our consolidated statements of operations due to the significance of YPLC’s distribution services to our Montana operations and reported as part of our logistics segment. Please read Note 23—Segment Information for further information on our reporting segments.

The change in our equity investment in YPLC is as follows (in thousands):


	Year Ended December 31,
	2024		2023
Beginning balance	$	27,662	$	—
Acquisition of investment	—		28,581
Equity earnings from YPLC	8,090		4,392
Accretion of basis difference	152		89

Dividends received	(6,760)		(5,400)

Ending balance	$	29,144	$	27,662

Investment in Laramie Energy

As of December 31, 2024, we owned a 46% ownership interest in Laramie Energy, an entity focused on developing and producing natural gas in Garfield, Mesa, and Rio Blanco counties, Colorado. The balance of our investment in Laramie Energy was $12.5 million and $14.3 million as of December 31, 2024, and December 31, 2023, respectively.

Prior to February 21, 2023, Laramie Energy had a term loan agreement which provided a term loan secured by a lien on its natural gas and crude oil properties and related assets. Under the terms of the term loan, Laramie Energy was generally prohibited from making future cash distributions to its owners, including us, except for certain permitted tax distributions.

On February 21, 2023, Laramie Energy entered into a term loan agreement which provides a $205 million first lien term loan facility with $160.0 million funded at closing and an optional $45 million delayed draw commitment, subject to certain terms and conditions. Laramie Energy used the proceeds from the term loan to repay the then-outstanding balance of $76.3 million on its existing term loan, including accrued interest and prepayment penalties, and fully redeem preferred equity of $73.5 million. After deducting transaction costs, net proceeds were $4.8 million. The delayed draw commitment expired in August 2024. Under the terms of the new term loan, Laramie is permitted to make future cash distributions to its owners, including us, subject to certain restrictions. Laramie Energy’s term loan matures on February 21, 2027. As of December 31, 2024 and 2023, the term loan had an outstanding balance of $160.0 million.

On March 1, 2023, pursuant to its new term loan agreement, Laramie Energy made a one-time cash distribution to its owners, including us, based on ownership percentage. Our share of this distribution was $10.7 million, which was reflected as Return of capital from Laramie Energy, LLC on our consolidated statements of cash flows. We recorded the cash received as Equity earnings (losses) from Laramie Energy, LLC on our consolidated statements of operations because the carrying value of our investment in Laramie Energy was zero at the time of such distribution. On April 29, 2024, Laramie Energy made a cash distribution to its owners, including us, based on ownership percentage. Our share of this distribution was $1.5 million.

Effective February 21, 2023, and concurrent with Laramie’s entry into the new term loan agreement noted above, we resumed the application of equity method accounting with respect to our investment in Laramie Energy. At December 31, 2024, our equity in the underlying net assets of Laramie Energy exceeded the carrying value of our investment by approximately $64.3 million. This difference arose primarily due to other-than-temporary impairments of our equity investment in Laramie Energy.

The change in our equity investment in Laramie Energy is as follows (in thousands):


	Year Ended December 31,
	2024		2023
Beginning balance	$	14,279	$	—
Equity earnings (losses) from Laramie Energy	(6,753)		19,471
Accretion of basis difference	6,457		5,514
Distribution received	(1,485)		(10,706)


Ending balance	$	12,498	$	14,279