Par Pacific's Q4 2024: Unpacking Contradictions on SAF Projects, Cost Strategies, and Market Conditions

These are the key contradictions discussed in Par Pacific's latest 2024Q4 earnings call, specifically including: SAF project expectations and cost structure reengineering, Share Repurchase Strategy, and West Coast Market Conditions, Laramie refinery divestment considerations, and SAF project progression and SAF sales mix expectations:



Financial Performance and Refining Margins:
- Par Pacific reported adjusted EBITDA of $239 million and adjusted net income of $0.37 per share for the fourth quarter of 2024.
- The company's financial performance was driven by strong operational results, including record refining throughput and improved refinery safety and reliability.
- The durability of results despite challenging refining markets reflects the benefits of Par Pacific's diversified business model and the unique markets served.

Hawaii Refining and Retail Segment Success:
- The Hawaii Refining business unit performed well, contributing significantly to Par Pacific's overall results, with record Logistics and Retail adjusted EBITDA.
- The Retail segment saw a 10% increase in adjusted EBITDA compared to 2023, driven by expanding fuel margins and lower operating costs in Hawaii.
- This success is attributed to strong in-store performance, fuel volume expansion, and the contributions from new-to-industry sites in Hawaii and the Pacific Northwest.

Investment in SAF Projects and Strategic Growth:
- Par Pacific invested in its SAF project in Hawaii, aiming for start-up in the second half of 2025, with significant interest from airlines, both domestic and international.
- This project is positioned to supply fuels to western markets and offer SAF to the emerging Asia Pacific market, leveraging Par Pacific's established network and logistics.
- The strategic investment is expected to enhance earnings power and is supported by a strong balance sheet, allowing for accretive capital allocation.

Wyoming Refinery Incident and Recovery Plan:
- The Wyoming refinery experienced an operational incident resulting in damage to the crude heater furnace, idling the refinery on February 12.
- The February incident is expected to reduce Q1 throughput, with a ramp-up to full rates by Memorial Day.
- Par Pacific is working diligently to restore the plant, with plans to resume partial operations targeting 50% utilization by mid-April, and full rates before Memorial Day.

Share Repurchase Authorization and Capital Allocation:
- The company reauthorized management for purchasing up to $250 million of common stock, following nearly $5 million shares repurchased in 2024.
- This authorization is seen as opening additional capacity for repurchases, with a focus on balancing repurchases versus other financing alternatives, maintaining a dynamic approach to capital allocation.