8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 7, 2017

Par Pacific Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware	1-36550	84-1060803
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

800 Gessner Road, Suite 875 Houston, Texas	77024
(Address of principal executive offices)	(Zip Code)

(281) 899-4800

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company  ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

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¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

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Item 2.02     Results of Operations and Financial Condition.

On August 7, 2017, Par Pacific Holdings, Inc. issued a news release reporting results for the second quarter of 2017. The news release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

In accordance with General Instruction B.2 of Form 8-K, the foregoing information, including Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information and Exhibit 99.1 be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01     Financial Statements and Exhibits.

(d) Exhibits

99.1 News release dated August 7, 2017.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		Par Pacific Holdings, Inc.
Dated:	August 7, 2017	/s/ James Matthew Vaughn
		James Matthew Vaughn Senior Vice President and General Counsel

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EX-99.1

NEWS RELEASE

PAR PACIFIC HOLDINGS REPORTS SECOND QUARTER 2017 RESULTS

• Second Quarter Net Income of $7.0 million, or $0.15 per diluted share

• Second QuarterAdjusted Net Income of $11.1 million, or $0.24 per diluted share

• Second Quarter Adjusted EBITDA of $29.6 million

• Net debt reduction of $41.7 million in the first half of 2017

• Board approved $27 million project to increase distillate production capacity in Hawaii

HOUSTON, August 7, 2017 - Par Pacific Holdings, Inc. (NYSE AMERICAN: PARR) (“Par Pacific” or the “Company”) today reported its financial results for the quarter ended June 30, 2017. Par Pacific reported net income of $7.0 million, or $0.15 per diluted share, for the quarter ended June 30, 2017, compared to a net loss of $(13.1) million, or $(0.32) per diluted share, for the same quarter in 2016. Second quarter2017 Adjusted Net Income was $11.1 million, compared to an Adjusted Net Loss of $(35.0) million in the second quarter of 2016. Second quarter 2017 Adjusted EBITDA was $29.6 million, compared to a loss of $(6.8) million in the second quarter of 2016. A reconciliation of reported non-GAAP financial measures to their most directly comparable GAAP financial measures can be found in the tables accompanying this news release.

Commenting on the results, William Pate, Par Pacific’s President and Chief Executive Officer, said, “Our team continues to execute in a mid-cycle market environment resulting in three consecutive quarters of positive earnings. In addition to strong operations, we improved our balance sheet during the second quarter through optional repayment of our corporate debt.”

“With recent new fuels sale agreements in Hawaii, we are currently limited in our ability to deliver more high-quality product volumes,” Mr. Pate added. “To meet growing demand, we are pleased to announce a capital project that should increase our high-quality products, such as ultra-low sulfur distillate production in Hawaii, thereby enhancing our competitive position and driving attractive Adjusted EPS growth beginning in 2019.”

Refining

The Refining segment generated operating income of $13.6 million for the second quarter of 2017, compared to operating income of $1.2 million for the second quarter of 2016. Adjusted Gross Margin for the Refining segment was $57.8 million in the second quarter of 2017, compared to $16.6 million in the second quarter of 2016.

Refining Adjusted EBITDA was $22.9 million in the second quarter of 2017, compared to Refining Adjusted EBITDA losses of $(6.5) million in the second quarter of 2016.

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Hawaii Refinery

The combined Mid Pacific Index was $8.96/bbl in the second quarter of 2017, compared to $6.00/bbl in the second quarter of 2016. The Hawaii refinery’s throughput in the second quarter of 2017 was 73 thousand barrels per day (Mbpd). This compares to 78 Mbpd throughput for the same quarter in 2016. Production costs were $3.56 per throughput barrel in the second quarter of 2017, compared to $3.15 per throughput barrel in the same period in 2016, mainly attributed to planned downtime for reformer catalyst regeneration.

The Company’s board of directors has approved a $27 million hydrotreater project to increase ultra-low sulfur distillate production capacity in Hawaii. Completion is anticipated during the fourth quarter of 2019.

Wyoming Refinery

During the second quarter of 2017, the Wyoming 3-2-1 Index averaged $21.47/bbl. The Wyoming refinery’s throughput was 16 Mbpd in the second quarter of 2017. Production costs were $7.06 per throughput barrel in the second quarter of 2017.

Retail

The Retail segment reported operating income of $7.0 million in the second quarter of 2017, compared to $3.4 million in the second quarter of 2016. Adjusted Gross Margin for the Retail segment was $20.4 million in the second quarter of 2017, compared to $15.4 million in the same quarter of 2016. Retail Adjusted EBITDA was $8.5 million in the second quarter of 2017, compared to $4.9 million in the second quarter of 2016. The Retail segment had sales volumes of 23.7 million gallons in the second quarter of 2017, compared to 23.0 million gallons in the same quarter of 2016.

Logistics

The Logistics segment generated operating income of $7.4 million in the second quarter of 2017, compared to $5.0 million for the second quarter of 2016. Wyoming Refining contributed approximately $1.6 million of operating income to the Logistics segment during the second quarter of 2017. Adjusted Gross Margin for the Logistics segment was $13.8 million in the second quarter of 2017, compared to $8.2 million in the same quarter last year. Logistics Adjusted EBITDA was $8.9 million in the second quarter of 2017, compared to $5.9 million in the second quarter of 2016.

Laramie Energy

Equity earnings from Laramie Energy, LLC (“Laramie”) in the second quarter of 2017 were $2.4 million, compared to equity losses of $(16.9) million in the second quarter of 2016. Second quarter2017earnings attributable to Par Pacific’s 42.3% ownership interest in Laramie included $3.7 million in unrealized gains on derivative instruments and $5.3 million in depreciation, depletion and amortization expense.

Laramie averaged 138 million cubic feet equivalent per day (MMcfed) of production during the second quarter of 2017 and exited the quarter with daily production of 140 MMcfe.

Liquidity

Net cash provided by operations totaled $62.2 million for the six months ended June 30, 2017, compared to $(28.8) millionused in the six months endedJune 30, 2016. At June 30, 2017, Par Pacific’s cash balance totaled $54.2 million, long-term debt totaled $340.6 million (including current maturities), and total liquidity was $92.1 million. In total, Par Pacific reduced its net debt by $41.7 million during the first half of 2017.

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Conference Call Information

A conference call is scheduled for Tuesday, August 8, 2017 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 Pacific call. The webcast may be accessed online through the Company’s website at http://www.parpacific.com on the Investor Relations page. Please log on at least 10 minutes early to register. A telephone replay will be available until August 22, 2017 and may be accessed by calling 1-877-660-6853 inside the U.S. or 1-201-612-7415 outside the U.S. and using the conference ID 13666005#.

About Par Pacific

Par Pacific Holdings, Inc., headquartered in Houston, Texas, owns, manages and maintains interests in energy and infrastructure businesses. Par Pacific’s strategy is to identify, acquire and operate energy and infrastructure companies with attractive competitive positions. Par Pacific owns and operates one of the largest energy infrastructure networks in Hawaii with a 94,000-bpd refinery, a logistics network supplying the major islands of the state and 91 retail locations. In Wyoming, Par Pacific owns a refinery and associated logistics network in a niche market. Par Pacific also owns 42.3% of Laramie Energy, LLC which has natural gas operations and assets concentrated in the Piceance Basin in Western Colorado. More information is available at www.parpacific.com.

Forward-Looking Statements

This news release (and oral statements regarding the subject matter of this news release, including those made on the conference call and webcast announced herein) 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, which are intended to qualify for the “safe harbor” from liability established by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements include, without limitation, statements about: expected market conditions; expected refinery throughput; anticipated capital expenditures, including major maintenance costs, and their effect on our financial and operating results, including earnings per share; anticipated retail sales volumes and on-island sales; the anticipated financial and operational results of Laramie Energy, LLC; the amount of our discounted net cash flows and the impact of our NOL carryforwards on them; the uncertainty inherent in estimating natural gas and oil reserves; our ability to identify, acquire and operate energy and infrastructure companies with attractive competitive positions; the anticipated financial and operating results of the Wyoming Refining Company and its effect on the Company’s cash flows, profitability, and earnings per share; and other risks and uncertainties detailed in Par Pacific’s Annual Report on Form 10-K for the year ended December 31, 2016 and any other documents that Par Pacific has filed with the Securities and Exchange Commission (SEC). Additionally, forward looking statements are subject to certain risks, trends, and uncertainties, such as changes to financial condition and liquidity; the volatility of crude oil and refined product prices; operating disruptions at our refineries 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 Pacific cannot provide assurances that the assumptions upon which these forward-looking statements are based will prove to have been correct. Should one of these risks materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expressed or implied in any forward-looking statements, and investors are cautioned not to place undue reliance on these forward-looking statements, which are current only as of this date. Par Pacific 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. The Company further

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expressly disclaims any written or oral statements made by a third party regarding the subject matter of this news release.

Contact:

Christine Laborde

Director, Investor Relations & Public Affairs

(832) 916-3396

claborde@parpacific.com

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Consolidated Statements of Operations

(in thousands, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Revenues	$	564,245		$	413,793		$	1,169,498		$	791,604
Operating expenses
Cost of revenues (excluding depreciation)	474,353			364,662			975,642			707,051
Operating expense (excluding depreciation)	51,675			35,878			102,023			74,085
Depreciation, depletion, and amortization	11,284			5,100			22,544			10,196
General and administrative expense (excluding depreciation)	10,482			10,621			23,396			21,791
Acquisition and integration expense	—			845			253			1,516
Total operating expenses	547,794			417,106			1,123,858			814,639
Operating income (loss)	16,451			(3,313		)	45,640			(23,035		)
Other income (expense)
Interest expense and financing costs, net	(9,139		)	(6,106		)	(18,081		)	(10,719		)
Loss on termination of financing agreements	(1,804		)	—			(1,804		)	—
Other income, net	107			67			237			116
Change in value of common stock warrants	(547		)	1,176			(1,236		)	2,820
Change in value of contingent consideration	—			3,552			—			9,728
Equity earnings (losses) from Laramie Energy, LLC	2,352			(16,948		)	11,098			(18,818		)
Total other income (expense), net	(9,031		)	(18,259		)	(9,786		)	(16,873		)
Income (loss) before income taxes	7,420			(21,572		)	35,854			(39,908		)
Income tax benefit (expense)	(414		)	8,484			(1,062		)	8,147
Net income (loss)	$	7,006		$	(13,088	)	$	34,792		$	(31,761	)

Weighted-average shares outstanding
Basic	45,541		41,015			45,505		40,991
Diluted	45,564		41,015			45,536		40,991
Income (loss) per share
Basic	$	0.15	$	(0.32	)	$	0.76	$	(0.77	)
Diluted	$	0.15	$	(0.32	)	$	0.75	$	(0.77	)

Balance Sheet Data

	June 30, 2017		December 31, 2016
Balance Sheet Data
Cash and cash equivalents	$	54,164	$	47,772
Working capital (deficit) (1)	1,620		(7,143		)
Debt, including current portion	340,556		370,396
Total stockholders’ equity	407,508		368,909

________________________________________

(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 June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Total Refining Segment
Feedstocks Throughput (Mbpd)	89.2			77.5			90.1			75.9
Refined product sales volume (Mbpd)	86.7			69.7			90.7			75.6
Hawaii Refinery
Feedstocks Throughput (Mbpd)	72.7			77.5			74.7			75.9
Source of Crude Oil:
North America	13.8		%	26.5		%	29.3		%	45.1		%
Asia	23.3		%	40.7		%	24.6		%	32.6		%
Africa	17.3		%	20.7		%	20.1		%	12.6		%
Latin America	—		%	0.9		%	0.2		%	4.0		%
Middle East	45.6		%	11.2		%	25.8		%	5.7		%
Total	100.0		%	100.0		%	100.0		%	100.0		%
Yield (% of total throughput)
Gasoline and gasoline blendstocks	27.5		%	27.3		%	27.5		%	26.8		%
Distillate	49.1		%	47.1		%	47.0		%	44.2		%
Fuel oils	14.1		%	17.7		%	16.3		%	19.9		%
Other products	6.2		%	4.7		%	6.0		%	5.7		%
Total yield	96.9		%	96.8		%	96.8		%	96.6		%
Refined product sales volume (Mbpd)
On-island sales volume	60.6			61.0			61.2			60.9
Exports sale volume	8.7			8.7			13.4			14.7
Total refined product sales volume	69.3			69.7			74.6			75.6
4-1-2-1 Singapore Crack Spread ($ per barrel) (1)	$	6.95		$	2.46		$	6.84		$	2.92
4-1-2-1 Mid Pacific Crack Spread ($ per barrel) (1)	8.35			3.96			8.02			4.22
Mid Pacific Crude Oil Differential ($ per barrel)(2)	(0.61		)	(2.04		)	(0.91		)	(2.07		)
Operating income (loss) per bbl ($/throughput bbl)	1.18			(1.08		)	2.63			(0.19		)
Adjusted Gross Margin per bbl ($/throughput bbl) (3)	5.76			2.35			6.43			3.53
Production costs per bbl ($/throughput bbl) (4)	3.56			3.15			3.64			3.44
DD&A per bbl ($/throughput bbl)	0.66			0.28			0.65			0.28
Wyoming Refinery
Feedstocks Throughput (Mbpd)	16.5			—			15.4			—
Yield (% of total throughput)
Gasoline and gasoline blendstocks	48.8		%	—		%	51.2		%	—		%
Distillate	45.9		%	—		%	43.2		%	—		%
Fuel oils	2.5		%	—		%	2.6		%	—		%
Other products	1.9		%	—		%	1.7		%	—		%
Total yield	99.1		%	—		%	98.7		%	—		%
Refined product sales volume (Mbpd)	17.4			—			16.1			—

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Wyoming Refinery (continued)
Wyoming 3-2-1 Index ($ per barrel) (5)	$	21.47	$	—	$	18.99	$	—
Operating income (loss) per bbl ($/throughput bbl)	3.90		—		1.99		—
Adjusted Gross Margin per bbl ($/throughput bbl) (3)	13.08		—		11.41		—
Production costs per bbl ($/throughput bbl) (4)	7.06		—		7.25		—
DD&A per bbl ($/throughput bbl)	2.06		—		2.18		—
Retail Segment
Retail sales volumes (thousands of gallons)	23,746		22,998		45,804		45,284
Logistics Segment
Pipeline throughput (Mbpd)
Crude oil pipelines	86.7		80.9		88.7		78.5
Refined product pipelines	84.2		61.8		87.5		68.2
Total pipeline throughput	170.9		142.7		176.2		146.7

________________________________________

(1) The profitability of our Hawaii business is heavily influenced by crack spreads in both the Singapore and U.S. West Coast markets. These markets reflect the closest liquid market alternatives to source refined products for Hawaii. We believe the Singapore and Mid Pacific crack spreads (or four barrels of Brent crude converted into one barrel of gasoline, two barrels of distillate (diesel and jet fuel) and one barrel of fuel oil) best reflect a market indicator for our Hawaii refinery operations. The Mid Pacific crack spread is 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 sulfur weight percentage of 0.65% that is indicative of our typical crude oil mix quality compared to Brent crude.

(3) Please see discussion of Adjusted Gross Margin below. We calculate Adjusted Gross Margin per barrel by dividing Adjusted Gross Margin by total refining throughput. 

(4) Management uses production costs per barrel to evaluate performance and compare efficiency to other companies in the industry. There are a variety of ways to calculate production costs per barrel; different companies within the industry calculate it in different ways. We calculate production costs per barrel by dividing all direct production costs, which include the costs to run the refineries including personnel costs, repair and maintenance costs, insurance, utilities and other miscellaneous costs, by total refining throughput. Our production costs are included in Operating expense (excluding depreciation) on our consolidated statement of operations, which also includes costs related to our bulk marketing operations.

(5) The profitability of our Wyoming refinery is heavily influenced by crack spreads in nearby markets. We believe the Wyoming 3-2-1 Index is the best market indicator for our operations in Wyoming. The Wyoming 3-2-1 Index is computed by taking two parts gasoline and one part distillate (ultra-low sulfur diesel) as created from three barrels 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.

Non-GAAP Performance Measures

Management uses certain financial measures to evaluate our operating performance that are considered non-GAAP financial measures. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP and our calculations thereof may not be comparable to similarly titled measures reported by other companies.

Adjusted Gross Margin

Adjusted Gross Margin is defined as (i) operating income (loss) plus operating expense (excluding depreciation), depreciation, depletion and amortization (“DD&A”), inventory valuation adjustment (which adjusts for timing differences to reflect the economics of our inventory financing agreements, including lower of cost or net realizable value adjustments, the impact of the embedded derivative repurchase obligation, and purchase price allocation adjustments), and unrealized gains (losses) on derivatives or (ii) revenues less cost of revenues (excluding depreciation) less inventory valuation adjustments and unrealized gains (losses) on derivatives. We define cost of revenues (excluding depreciation) as the hydrocarbon-related costs of inventory sold,

transportation costs of delivering product to customers, crude oil consumed in the refining process, costs to satisfy our RINS obligations and certain hydrocarbon fees and taxes. Cost of revenues (excluding depreciation) also includes the unrealized gains (losses) on derivatives and inventory valuation adjustments that we exclude from Adjusted Gross Margin.

Management believes Adjusted Gross Margin is an important measure of operating performance and uses Adjusted Gross Margin per barrel to evaluate operating performance and compare profitability to other companies in the industry and to industry benchmarks. Management believes Adjusted Gross Margin provides useful information to investors because it eliminates the gross impact of volatile commodity prices and adjusts for certain non-cash items and timing differences created by our inventory financing agreement and lower of cost or net realizable value adjustments to demonstrate the earnings potential of the business before other fixed and variable costs, which are reported separately in Operating expense (excluding depreciation) and Depreciation, depletion, and amortization.

Adjusted 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. Adjusted Gross Margin presented by other companies may not be comparable to our presentation since each company may define this term differently as they may include other manufacturing costs and depreciation expense in cost of revenues.

The following tables present a reconciliation of Adjusted Gross Margin to the most directly comparable GAAP financial measure, operating income (loss), on a historical basis, for selected segments, for the periods indicated (in thousands):    

Three months ended June 30, 2017	Refining			Logistics		Retail
Operating income (loss)	$	13,642		$	7,423	$	6,996
Operating expense (excluding depreciation)	34,895			4,849		11,951
Depreciation, depletion and amortization	7,450			1,524		1,458
Inventory valuation adjustment	(2,620		)	—		—
Unrealized loss / (gain) on derivatives	4,399			—		—
Adjusted Gross Margin	$	57,766		$	13,796	$	20,405

Three months ended June 30, 2016	Refining			Logistics		Retail
Operating income (loss)	$	1,191		$	5,001	$	3,409
Operating expense (excluding depreciation)	23,093			2,321		10,454
Depreciation, depletion and amortization	1,954			923		1,494
Inventory valuation adjustment	(676		)	—		—
Unrealized loss / (gain) on derivatives	(8,949		)	—		—
Adjusted Gross Margin	$	16,613		$	8,245	$	15,357

Six Months Ended June 30, 2017	Refining			Logistics		Retail
Operating income (loss)	$	41,058		$	16,836	$	13,116
Operating expense (excluding depreciation)	71,111			8,646		22,266
Depreciation, depletion and amortization	14,853			3,011		2,906
Inventory valuation adjustment	(11,412		)	—		—
Unrealized loss / (gain) on derivatives	3,112			—		—
Adjusted Gross Margin	$	118,722		$	28,493	$	38,288

Six Months Ended June 30, 2016	Refining			Logistics		Retail
Operating income (loss)	$	(17,101	)	$	10,145	$	10,279
Operating expense (excluding depreciation)	49,143			4,220		20,598
Depreciation, depletion and amortization	3,894			1,841		3,032
Inventory valuation adjustment	20,760			—		—
Unrealized loss / (gain) on derivatives	(7,934		)	—		—
Adjusted Gross Margin	$	48,762		$	16,206	$	33,909

Adjusted Net Income (Loss) and Adjusted EBITDA

Adjusted Net Income (Loss) is defined as net income (loss) excluding changes in the value of contingent consideration and common stock warrants, acquisition and integration expense, unrealized (gains) losses on derivatives, inventory valuation adjustment, loss on termination of financing agreements, and release of tax valuation allowance. Effective in the first quarter of 2017, Adjusted Net Income (Loss) also excludes severance costs. We have recast the non-GAAP information for the three and six months ended months ended June 30, 2016 to conform to the current period presentation.

Adjusted EBITDA is Adjusted Net Income (Loss) excluding interest and financing fees, taxes, DD&A, and equity earnings (losses) from Laramie Energy, LLC. We believe Adjusted Net Income (Loss) and Adjusted EBITDA are useful supplemental financial measures that allow investors 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 Net Income (Loss) and Adjusted EBITDA 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) and Adjusted EBITDA presented by other companies may not be comparable to our presentation as other companies may define these terms differently.

The following table presents a reconciliation of Adjusted Net Income (Loss) and Adjusted EBITDA to the most directly comparable GAAP financial measure, net income (loss), on a historical basis for the periods indicated (in thousands):    

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Net income (loss)	$	7,006		$	(13,088	)	$	34,792		$	(31,761	)
Inventory valuation adjustment	(2,620		)	(1,059		)	(11,412		)	17,261
Unrealized loss (gain) on derivatives	4,399			(8,406		)	3,112			(7,414		)
Acquisition and integration expense	—			845			253			1,516
Loss on termination of financing agreements	1,804			—			1,804			—
Increase in (release of) tax valuation allowance (1)	—			(8,573		)	—			(8,573		)
Change in value of common stock warrants	547			(1,176		)	1,236			(2,820		)
Change in value of contingent consideration	—			(3,552		)	—			(9,728		)
Severance costs	—			—			1,595			—
Adjusted Net Income (Loss)	11,136			(35,009		)	31,380			(41,519		)
Depreciation, depletion and amortization	11,284			5,100			22,544			10,196
Interest expense and financing costs, net	9,139			6,106			18,081			10,719
Equity losses (earnings) from Laramie Energy, LLC	(2,352		)	16,948			(11,098		)	18,818
Income tax expense	414			89			1,062			426
Adjusted EBITDA	$	29,621		$	(6,766	)	$	61,969		$	(1,360	)

	Three Months Ended June 30,					Six Months Ended June 30,
	2017		2016			2017		2016
Adjusted Net Income (Loss) per share
Basic (1)	$	0.24	$	(0.85	)	$	0.68	$	(1.01	)
Diluted (2)	$	0.24	$	(0.85	)	$	0.68	$	(1.01	)

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(1) Basic Adjusted Net Income (Loss) per share is calculated as Adjusted Net Income (Loss), excluding undistributed Adjusted Net Income allocated to participating securities, divided by weighted-average shares outstanding. Undistributed Adjusted Net Income allocated to participating securities during the three and six months ended June 30, 2017 was $144 thousand and $373 thousand, respectively. Weighted-average shares outstanding are the same as those used in the Income (loss) per share calculation. Adjusted Net Losses are not allocated to participating securities.

(2) Diluted Adjusted Net Income (Loss) per share is calculated as Adjusted Net Income (Loss), excluding undistributed Adjusted Net Income allocated to participating securities, divided by weighted-average diluted shares outstanding. Weighted-average diluted shares outstanding are the same as those used in the Income (loss) per share calculation.

Adjusted EBITDA by Segment

Adjusted EBITDA by segment is defined as operating income (loss) by segment excluding unrealized (gains) losses on derivatives, inventory valuation adjustment, severance costs, and 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.

The following table presents a reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure, operating income (loss), on a historical basis, for selected segments, for the periods indicated (in thousands):

	Three Months Ended June 30, 2017
	Refining			Logistics		Retail
Operating income (loss) by segment	$	13,642		$	7,423	$	6,996
Depreciation, depletion and amortization	7,450			1,524		1,458
Inventory valuation adjustment	(2,620		)	—		—
Unrealized loss (gain) on derivatives	4,399			—		—
Adjusted EBITDA	$	22,871		$	8,947	$	8,454

	Three Months Ended June 30, 2016
	Refining			Logistics		Retail
Operating income (loss) by segment	$	1,191		$	5,001	$	3,409
Depreciation, depletion and amortization	1,954			923		1,494
Inventory valuation adjustment	(676		)	—		—
Unrealized loss (gain) on derivatives	(8,949		)	—		—
Adjusted EBITDA	$	(6,480	)	$	5,924	$	4,903

	Six Months Ended June 30, 2017
	Refining			Logistics		Retail
Operating income (loss) by segment	$	41,058		$	16,836	$	13,116
Depreciation, depletion and amortization	14,853			3,011		2,906
Inventory valuation adjustment	(11,412		)	—		—
Unrealized loss (gain) on derivatives	3,112			—		—
Severance costs	395			—		—
Adjusted EBITDA	$	48,006		$	19,847	$	16,022

	Six Months Ended June 30, 2016
	Refining			Logistics		Retail
Operating income (loss) by segment	$	(17,101	)	$	10,145	$	10,279
Depreciation, depletion and amortization	3,894			1,841		3,032
Inventory valuation adjustment	20,760			—		—
Unrealized loss (gain) on derivatives	(7,934		)	—		—
Adjusted EBITDA	$	(381	)	$	11,986	$	13,311