PAR PACIFIC HOLDINGS, INC.PARR
PAR PACIFIC HOLDINGS, INC. Fair Value Disclosure
Fair Value Measurements
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Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Purchase Price Allocation of Billings Acquisition
The fair values of the assets acquired and liabilities assumed as a result of the Billings Acquisition were estimated as of June 1, 2023, the date of the acquisition, using valuation techniques described in notes (1) through (5) below.
| Valuation | |||||||||||
| Fair Value | Technique | ||||||||||
| (in thousands) | |||||||||||
| Net working capital excluding operating leases | $ | 294,507 | (1) | ||||||||
| Property, plant, and equipment | 259,088 | (2) | |||||||||
| Operating lease right-of-use assets | 3,562 | (3) | |||||||||
| Refining and logistics equity investments | 86,600 | (4) | |||||||||
| Other long-term assets | 4,094 | (1) | |||||||||
| Current operating lease liabilities | (2,081) | (3) | |||||||||
| Long-term operating lease liabilities | (1,481) | (3) | |||||||||
| Environmental liabilities | (18,869) | (5) | |||||||||
| Total | $ | 625,420 | |||||||||
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(1)Current assets acquired and liabilities assumed were recorded at their net realizable value. Other long-term assets include preliminary costs for future turnarounds that were recently incurred and were recorded at their net realizable value.
(2)The fair value of personal property was estimated using the cost approach. Key assumptions in the cost approach include determining the replacement cost by evaluating recent purchases of comparable assets or published data, and adjusting replacement cost for economic and functional obsolescence, location, normal useful lives, and capacity (if applicable). The fair value of real property was estimated using the market approach. Key assumptions in the market approach include
determining the asset value by evaluating recent purchases of comparable assets under similar circumstances. We consider this to be a Level 3 fair value measurement.
(3)Operating lease right-of-use assets and liabilities were recognized based on the present value of lease payments over the lease term using the incremental borrowing rate at acquisition of 9.6%.
(4)The fair value of our investments in YELP and YPLC were determined using a combination of the income approach and the market approach. Under the income approach, we estimated the present value of expected future cash flows using a market participant discount rate. Under the market approach, we estimated fair value using observable multiples for comparable companies in the investments’ industries. These valuation methods require us to make significant estimates and assumptions regarding future cash flows, capital projects, commodity prices, long-term growth rates, and discount rates. We consider this to be a Level 3 fair value measurement.
(5)Environmental liabilities are based on management’s best estimates of probable future costs using currently available information. We consider this to be a Level 3 fair value measurement.
Equity Method Investments
We evaluate equity method investments for impairment when factors indicate that a decrease in the value of our investment has occurred and the carrying amount of our investment may not be recoverable. An impairment loss, based on the difference between the carrying value and the estimated fair value of the investment, is recognized in earnings when an impairment is deemed to be other than temporary.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Derivative Instruments
We classify financial assets and liabilities according to the fair value hierarchy. Financial assets and liabilities classified as Level 1 instruments are valued using quoted prices in active markets for identical assets and liabilities. These include our exchange traded futures. Level 2 instruments are valued using quoted prices for similar assets and liabilities in active markets and inputs other than quoted prices that are observable for the asset or liability. Our Level 2 instruments include OTC swaps and options, as well as the embedded derivative for our Hawaii Renewables intermediation agreement. These derivatives are valued using market quotations from independent price reporting agencies and commodity exchange price curves that are corroborated with market data. Level 3 instruments are valued using significant unobservable inputs that are not supported by sufficient market activity. The valuation of the embedded derivative related to our Citi repurchase obligation is based on estimates of the prices and a weighted-average price differential assuming settlement at the end of the reporting period. Estimates of the Citi settlement prices are based on observable inputs, such as Brent indices, and unobservable inputs, such as contractual price differentials as defined in the Inventory Intermediation Agreement. Prior to the termination of the Supply and Offtake Agreement on May 31, 2024, we had embedded derivatives related to our J. Aron repurchase obligation which were based on estimates of the prices and differentials assuming settlement at the end of the reporting period. Estimates of the J. Aron settlement prices were based on observable inputs, such as Brent indices, and unobservable inputs, such as contractual price differentials as defined in the Supply and Offtake Agreement. Contractual price differentials are considered unobservable inputs; therefore, these embedded derivatives are classified as Level 3 instruments. We do not have other commodity derivatives classified as Level 3 at December 31, 2025 or 2024. Please read “Note 16—Derivatives” for further information on derivatives.
Gross Environmental Credit Obligations
During the quarter ended December 31, 2023, we had a change in estimate in our valuation of our gross environmental credit obligations, due to the settlement of all outstanding prior period environmental credit obligations. Beginning in the fourth quarter of 2023, the portion of the estimated gross environmental credit obligations satisfied by internally generated or purchased environmental credit assets is recorded at the carrying value of such environmental credit assets The remainder of the estimated gross environmental credit obligation is recorded at the market price of the environmental credits that are needed to satisfy the remaining obligation as of the end of the reporting period and classified as Level 2 instruments as we obtain the pricing inputs for the environmental credit obligations from brokers based on market quotes on similar instruments. As of December 31, 2025, the EPA has not made a determination with respect to small refinery exemptions for the 2025 compliance year. Accordingly, our recorded RFS obligation for the year ended December 31, 2025, reflects 100% of the RFS obligation for the period with no assumption of SRE relief. Please read “Note 19—Commitments and Contingencies” for further information on the EPA regulations related to greenhouse gases.
Financial Statement Impact
Fair value amounts by hierarchy level as of December 31, 2025 and 2024, are presented gross in the tables below (in thousands):
| December 31, 2025 | |||||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Gross Fair Value | Effect of Counter-party Netting | Net Carrying Value on Balance Sheet (1) | ||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||
Commodity and environmental credit derivatives | $ | 2,439 | $ | 422,235 | $ | — | $ | 424,674 | $ | (400,411) | $ | 24,263 | |||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||
Commodity and environmental credit derivatives | $ | (1,833) | $ | (399,522) | $ | — | $ | (401,355) | $ | 400,411 | $ | (944) | |||||||||||||||||||||||
| Citi repurchase obligation derivative | — | — | 3,289 | 3,289 | — | 3,289 | |||||||||||||||||||||||||||||
Wells Fargo terminal obligation derivative | — | 517 | 517 | — | 517 | ||||||||||||||||||||||||||||||
Interest rate derivatives | — | (380) | — | (380) | — | (380) | |||||||||||||||||||||||||||||
Gross environmental credit obligations (2) (3) | — | (23,679) | — | (23,679) | — | (23,679) | |||||||||||||||||||||||||||||
Total | $ | (1,833) | $ | (423,064) | $ | 3,289 | $ | (421,608) | $ | 400,411 | $ | (21,197) | |||||||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Gross Fair Value | Effect of Counter-party Netting | Net Carrying Value on Balance Sheet (1) | ||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||
Commodity and environmental credit derivatives | $ | 209,666 | $ | 13,506 | $ | — | $ | 223,172 | $ | (212,581) | $ | 10,591 | |||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||
Commodity and environmental credit derivatives | $ | (215,139) | $ | (10,898) | $ | — | $ | (226,037) | $ | 212,581 | $ | (13,456) | |||||||||||||||||||||||
Citi repurchase obligation derivative | — | — | (1,588) | (1,588) | — | (1,588) | |||||||||||||||||||||||||||||
| Interest rate derivatives | — | (24) | — | (24) | — | (24) | |||||||||||||||||||||||||||||
Gross environmental credit obligations (2) (3) | — | (44,498) | — | (44,498) | — | (44,498) | |||||||||||||||||||||||||||||
Total | $ | (215,139) | $ | (55,420) | $ | (1,588) | $ | (272,147) | $ | 212,581 | $ | (59,566) | |||||||||||||||||||||||
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(1)Does not include cash collateral of $7.0 million and $38.6 million as of December 31, 2025 and 2024, respectively, included within Prepaid and other current assets on our consolidated balance sheets, respectively.
(2)Does not include RINs assets and other environmental credits of $450.7 million and $195.0 million presented in Inventories on our consolidated balance sheet and stated at the lower of cost and net realizable value as of December 31, 2025 and 2024, respectively.
(3)Does not include environmental liabilities of $356.7 million and $187.5 million satisfied by internally generated or purchased environmental credits and presented at the carrying value of these credits included in Other Accrued Liabilities on our consolidated balance sheets as of December 31, 2025 and 2024, respectively.
A roll forward of Level 3 derivative instruments measured at fair value on a recurring basis is as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance, beginning of period | $ | (1,588) | $ | (392) | $ | 2,279 | |||||||||||
| Settlements | — | (661) | 19,714 | ||||||||||||||
| Total gains (losses) included in earnings (1) | 4,877 | (535) | (22,385) | ||||||||||||||
| Balance, end of period | $ | 3,289 | $ | (1,588) | $ | (392) | |||||||||||
(1)Included in Cost of revenues (excluding depreciation) on our consolidated statements of operations.
The carrying value and fair value of long-term debt and other financial instruments as of December 31, 2025 and 2024 are as follows (in thousands):
| December 31, 2025 | |||||||||||
| Carrying Value | Fair Value | ||||||||||
ABL Credit Facility due 2028 (1) | $ | 175,000 | $ | 175,000 | |||||||
Term Loan Credit Agreement due 2030 (2) | 621,665 | 633,625 | |||||||||
Product Financing Agreement (2) | — | — | |||||||||
Other long-term debt (2) | 6,205 | 6,310 | |||||||||
| December 31, 2024 | |||||||||||
| Carrying Value | Fair Value | ||||||||||
| ABL Credit Facility due 2028 (1) | 483,000 | 483,000 | |||||||||
| Term Loan Credit Agreement due 2030 (2) | 625,859 | 636,924 | |||||||||
Product Financing Agreement (2) | — | — | |||||||||
| Other long-term debt (2) | 4,108 | 4,412 | |||||||||
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(1)The fair value measurement of the ABL Credit Facility is considered a Level 3 measurement in the fair value hierarchy
(2)The fair value measurements of the Term Loan Credit Agreement, Product Financing Agreement and Other long-term debt are considered Level 2 measurements in the fair value hierarchy as discussed below.
The fair value of the Term Loan Credit Agreement and Other long-term debt were determined using a market approach based on quoted prices. The inputs used to measure the fair value are classified as Level 2 inputs within the fair value hierarchy because the Term Loan Credit Agreement and Other long-term debt may not be actively traded.
The carrying value of our ABL Credit Facility, Renewables LC Facility and Product Financing Agreement were determined to approximate fair value as of December 31, 2025. The fair value of all non-derivative financial instruments recorded in current assets, including cash and cash equivalents, restricted cash, and trade accounts receivable, and current liabilities, including accounts payable, approximated their carrying value due to their short-term nature.
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.