Par Pacific Holdings Inc (NYSE:PARR) Q3 2019 Earnings Conference Call - Final Transcript

Nov 05, 2019 • 10:00 am ET

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Par Pacific Holdings Inc (NYSE:PARR) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
William C. Pate

first quarter of next year. With that cutover all of our businesses will be fully integrated and coordinated from a systems and process perspective. Our team has done a great job in integrating the acquisitions of the past 2 years with a lean acquisition and integration budget. With these activities we are now comfortable that our expected cost savings and commercial synergies will exceed the top end of the range that we provided at the announcement of the Tacoma acquisition. Looking forward we expect our businesses to continue performing well in the fourth quarter. Toward the end of the third quarter we began to see the initial impact of IMO 2020 in widening distillate to high-sulfur oil spread. Given our high distillate configuration in Hawaii we continue to be well-positioned for that event.

We're optimistic that we will generate strong cash flow for the remainder of 2019 which will enable us to repay debt lower our cost to capital and increase our adjusted earnings per share. Our goal continues to be to build sustainable free cash flows throughout the business cycle and we remain confident in our business long-term earnings and cash flow potential.

At this time I'd like to turn the call over to Joseph to provide more details on our operations.

Executive
Joseph Israel

Thank you Bill. The third quarter emphasized the importance of a balanced refining system. The exceptional performance and record financial results in Wyoming and Tacoma helped to smooth out the third quarter maintenance and market condition headwind in Hawaii.

Starting with our Wyoming refinery our 3-2-1 index was $27.32 per barrel reflecting seasonal strong gasoline demand in the Rocky Mountains. Our refinery throughput averaged approximately 17000 barrels per day. Our realized adjusted gross margin in the quarter was $25.65 per barrel including approximately $1.90 per barrel positive RINS net impact. Our production costs were $6.33 per barrel reflecting reliable and efficient operations. So far in the fourth quarter lower refining utilization rates in the Rocky Mountains and Midwest have supported strong margins for our Wyoming system. The 3-2-1 index has averaged approximately $30 per barrel in October. And our fourth quarter target throughput in Wyoming is approximately 17000 barrels per day as our improved commercial and logistics flexibility allows us to maintain high rates during off-season.

In Washington our Pacific Northwest 5-2-2-1 index was $14.76 per barrel on ANS basis reflecting stronger demand for gasoline and distillate. Our refinery throughput averaged approximately 38000 barrels per day. Adjusted gross margin in the third quarter was $11.33 per barrel with a capture of strong seasonal indecipherable contribution and favorable regional dynamics through IMO transition. Production costs were $4.40 per barrel. In October our 5-2-2-1 index has averaged approximately $25 per barrel reflecting planned and unplanned maintenance in the West Coast. Western Canadian select and Bakken crude differentials remain favorable and our plan is to increase throughput in Washington up to approximately 40000 per day in the fourth quarter.

In Hawaii global waterborne crude differentials continued to be elevated mostly