Investor Presentation April 2015
2 Forward‐Looking Statements 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, the ability to successfully integrate the Mid Pac acquisition, maintain adequate liquidity, realize the potential benefit of our net operating loss tax carryforwards, obtain sufficient debt and equity financings, capital costs, well production performance, operating costs, commodity pricing, differentials or crack spreads 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. 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.
3 Overview of Par Petroleum Hawaii Refining System • 94,000 bpd capacity refinery • 50% distillate yield configuration • 5.4 MM barrels of storage • 27 miles of clean / black oil product pipelines • Single Point Mooring (SPM) Hawaii Marketing System • Serve 116 fuel retail locations • Tesoro, 76 & 7‐Eleven brands • 8 refined product terminals Texadian Trading Arm • Historical shipper status on Express‐Platt and Enbridge main pipelines • Terminal and dock access in St. Louis area to move Canadian crude Natural Gas Production (Piceance Energy 34%) • 40,165 net acres across Colorado's Piceance Basin • Over 3,500 available well locations held by production • Approximately 19% by volume is liquids Map of Hawaiian Operations: Integrated refiner and marketer in the Mid Pacific Refinery Terminal Retail brands on island
4 Par Petroleum 2013 December 2011: Delta Petroleum (NYSE: DPTR) files Chapter 11 September 1, 2012: Joint venture with Laramie Energy II by forming Piceance Energy. June 25, 2013: Purchased Tesoro Hawaii for $75MM + working capital + share of turnaround costs. November 18, 2013: Hawaii Independent Energy Retail financing closing with Bank of Hawaii for $30MM and repayment of Par Petroleum Exit Facility April 1, 2015: Closed $107MM + working capital acquisition of Mid Pac July 16, 2014 Moved from OTCQB Marketplace to NYSE MKT: PARR September 1, 2012: Delta Petroleum emerges from Chapter 11. Company is renamed Par Petroleum (“Par”). December 31, 2012: Closed $14MM + working capital acquisition of SEACOR Energy; renamed Texadian Energy. September 25, 2013: Restart of Tesoro Hawaii refinery and closes acquisition alongside $200MM PIPE, Barclays supply & exchange agreements and $125MM ABL facility. Renamed Hawaii Independent Energy. January 29, 2014: 10‐1 reverse stock split February 20,2015 Texadian amendment of $100MM ABL facility
5 Hawaii Refinery Overview • Largest refinery on the island • Configured for island demand • 20 MW Cogen • 18,000 bpd Hydrocracker capacity • Nelson complexity rating 5.7
6 Hawaii Refinery Overview 1Q 2015 Crude Mix by Source Estimated 2015 Yield Profile Crude flexibility and heavily weighted distillate configuration
7 Retail and Logistics Retail Stores & Storage Capacity 77 9 17 12 30,000 bbls 185,000 Bbls 138,000 bbls 135,000 bbls 12,000 bbls Logistics • Single point mooring (SPM) one of only four import locations • 2.4MM barrels crude and 3MM barrels of product storage • 27 miles of clean / black oil product pipelines • 2 Barges delivering products to 8 refined product terminals and ocean vessels Marketing • Serve 116 retail locations • 31 Tesoro fuel brand locations • 69 ‘76’ fuel brand locations • 11 unbranded company operated cardlocks • 5 unbranded resellers • 28 7‐Eleven c‐store partnership sites • Total sales volume 135MM gallons/year (8,800 bpd) • Wholesale and bulk provider on the islands 1
8 Hawaii Market Refining need on island Hawaii Net Electricity Generation by Source * Based on company analysis On Island Demand 110‐120 MBpdDistillate Import 5‐15 MBpd Fuel Oil Export 5‐15 MBpd Other Refinery 54 MBpd Par 94 MBpd 20‐25 MBpd Source: EIA Source: DBEDT Visitor Arrivals by Air 2013‐2015 estimated increase 4% (In thousands)
9 Market Dynamics North American crude production increase has supported Mid Pacific crude differentials Combined Mid Cycle* Crude Differential $0.17 $0 $2 $4 $6 $8 $10 $12 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 4‐1‐2‐1 Mid Pacific Crack Spread 80% Singapore, 20% San Francisco Mid Pacific Crude Blend Purchased Refinery * company calculation based on a 3 year average for the 4‐1‐2‐1 Mid Pacific Crack Spread plus Mid Pacific Crude Blend
10 Piceance Energy Overview • 40,165 net acres across Colorado’s Piceance Basin • Over 300 producing wells in one of the lowest cost gas weighted basins in the continental U.S. • Over 3,500 undeveloped locations held by production • 99% success rate on wells in basin • Current well costs of $1.4 MM shows capability of creating a repeatable gas inventory with 20%+ IRR profile • 2015 exit production estimated to increase 33% to 60 MMcfe/d Company acreage Current Cost Structure 1.8 Bcf Gross EUR/Well $1.4MM D&C Cost Midpoint Nymex Gas Price ($/MMBtu) Oil Price ($/bbl) NGL Price ($/gal) NPV10 ($M/Well) IROR $2.00 $50.00 $0.36 (408) 2% $2.50 $50.00 $0.36 (97) 8% $3.00 $50.00 $0.36 214 14% $3.50 $50.00 $0.36 525 21% 3/6/2015 NYMEX Strip 669 24% $4.00 $50.00 $0.36 836 29% $4.50 $50.00 $0.36 1,147 37% $5.00 $50.00 $0.36 1,457 45% $5.50 $50.00 $0.36 1,769 55% $6.00 $50.00 $0.36 2,080 69% ‐20% 0% 20% 40% 60% 80% 100% (500) ‐ 500 1,000 1,500 2,000 2,500 $ 2 . 0 0 $ 2 . 5 0 $ 3 . 0 0 $ 3 . 5 0 $ 4 . 0 0 $ 4 . 5 0 $ 5 . 0 0 $ 5 . 5 0 $ 6 . 0 0 I R O R N P V ( $ M ) NYMEX Gas Price ($/MMBtu) 21 Well Pad ($1.4MM/Well D&C) NPV10 ($M/Well) IROR Strip Pricing
11 EOY Balance Sheet Highlights • Total debt $136.6 million / Net debt $47.7 million • Total Cash balance $89.2 million • Total liquidity $190.5 million • Gearing ratio 14% (net debt basis) Summarized Consolidated Balance Sheet As of December 31, 2014 (in thousands) LIABILITIES AND STOCKHOLDERS' EQUITY Current portion of long‐term debt $ 29,100 Other current liabilities 281,706 ASSETS Total current liabilities 310,806 Cash and cash equivalents $ 89,210 Long‐term debt, excluding current portion 107,510 Other current assets 371,579 Other liabilities 30,532 Total current assets 460,789 Total liabilities 448,848 Other assets 280,218 Total stockholders' equity 292,159 Total assets $ 741,007 Total liabilities and stockholders' equity $ 741,007
12 Growth Initiatives • Integrated growth to market limits in Hawaii Hawaii Refining & Marketing • Evaluate refinery and marketing opportunities (outside Hawaii market) • Pacific synergies preferred • Evaluate other energy equity plays Duplicating Business Model $1.4 billion unrestricted net operating loss carryforward “NOL”
13 Key Investment Highlights Refining and marketing in a niche market 50% distillate yields Growth oriented company with NOL structure Low cost natural gas production equity play Canadian crude access
Appendix
15 Enhanced Operating Stats (1) We acquired the refinery on September 25, 2013. These statistics are only reflective of our ownership period. (2) We define heavy crude oil as crude oil with an American Petroleum Institute gravity of 24 degrees or less. (3) Calculated using a ratio of 80% Singapore and 20% San Francisco indexes. (4) 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. (5) Management uses gross refining margin per barrel to evaluate performance and compare profitability to other companies in the industry. There are a variety of ways to calculate gross refining margin per barrel; different companies within the industry may calculate it in different ways. We calculate gross refining margin per barrel by dividing gross refining margin (revenues less feedstocks, purchased refined products, refinery fuel burn, and transportation and distribution costs) by total refining throughput. (6) Management uses production costs before DD&A expense per barrel to evaluate performance and compare efficiency to other companies in the industry. There are a variety of ways to calculate production cost before DD&A expense per barrel; different companies within the industry calculate it in different ways. We calculate production costs before DD&A expense per barrel by dividing all direct production costs by total refining throughput. (7) Calculated as gross refining margin less production costs before DD&A expense. Year Ended December 31, Q1 Q2 Q3 Q4 2014 2013 (1) Refinery throughput (BPD) 67,015 70,646 69,660 67,330 68,666 68,964 Refinery production (BPD) 68,324 71,231 70,590 68,009 69,541 70,174 Sales of refined products (BPD) 66,469 69,613 72,355 67,841 69,082 67,480 Refinery utilization 71% 75% 74% 72% 73% 73% Throughput (thousand bbls per day) Heavy crude (2) 29% 25% 18% 22% 23% 11% Light crude 71% 75% 82% 78% 77% 89% Total throughput 100% 100% 100% 100% 100% 100% Yield (thousand bbls per day) Gasoline and gasoline blendstocks 24% 26% 25% 24% 25% 27% Jet fuel 26% 24% 26% 25% 25% 32% Diesel fuel 12% 12% 15% 13% 13% 18% Heavy fuel oils, residual products, internally produced fuel & other 40% 38% 34% 39% 38% 26% Total yield 102% 100% 100% 101% 101% 103% 4-1-2-1 Mid Pacific Crack Spread (3) $ 6.84 $ 6.11 $ 7.46 $ 8.22 $ 7.16 $ 5.65 Mid Pacific Crude Blend (4) $ (0.91) $ (0.75) $ (2.23) $ (2.79) $ (1.67) $ (1.67) Gross margin ($ millions) $ 19.1 $ 10.4 $ 10.4 $ 74.4 $ 114.4 $ (4.1) Gross refining margin per barrel (5) $ 3.17 $ 1.63 $ 1.62 $ 12.01 $ 4.56 $ (0.65) Production costs before DD&A expense per barrel (6) $ 4.53 $ 4.35 $ 5.67 $ 5.20 $ 4.94 $ 4.04 Net operating margin per barrel (7) $ (1.36) $ (2.73) $ (4.05) $ 6.81 $ (0.38) $ (4.69)
16 Strong Capital Structure Condensed Balance Sheet December 31, December 31, (in thousands) 2014 2013 ASSETS Current assets Cash and cash equivalents $ 89,210 $ 38,061 Restricted cash 749 802 Trade accounts receivable 112,968 117,493 Inventories 243,853 380,623 Prepaid and other current assets 14,009 7,522 Total current assets 460,789 544,501 Property and equipment Total property and equipment 124,445 112,572 Property and equipment, net 112,935 108,604 Long‐term assets Investment in Piceance Energy, LLC 104,657 101,796 Other Assets 175,561 166,916 Total assets $ 741,007 $ 813,213 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Current maturities of long‐term debt $ 29,100 $ 3,250 Obligations under supply and exchange agreements 197,394 385,519 Accounts payable 33,064 28,870 Other liabilities 51,248 35,749 Total current liabilities 310,806 453,388 Long‐term liabilities Long‐term debt, net of current maturities and unamortized discount 107,510 94,030 Other liabilities 30,532 37,531 Total liabilities 448,848 584,949 Total stockholders' equity 292,159 228,264 Total liabilities and stockholders' equity $ 741,007 $ 813,213