Par Pacific Holdings, Inc.

Greetings and welcome to the Park Pacific Holdings first quarter earnings conference call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. It is now my pleasure to introduce your host, Ashimi Patel, Manager, Investor Relations for PAR Pacific Holdings. Thank you, Ms. Patel. You may begin.

Thank you, Operator. Welcome to PAR Pacific's first quarter earnings conference call. Joining me today are William Pate, President and Chief Executive Officer, Will Monteleone, Chief Financial Officer, and Joseph Israel, President and Chief Executive Officer of PAR Petroleum. Before we begin, note that our comments today may include forward-looking statements. Any forward-looking statements are subject to change and are not guarantees of future performance or events. They are subject to risks and uncertainties, and actual results may differ materially from these forward-looking statements. Accordingly, investors should not place undue reliance on forward-looking statements, and we disclaim any obligation to update or revise them. I refer you to our investor presentation on our website and to our filings with the SEC for non-GAAP reconciliations and additional information. I'll now turn the call over to our President and Chief Executive Officer, Bill Pate.

Thank you, Ashimi. Good morning and welcome to all our conference call participants. I'd like to begin this call by wishing you and your families the best of health and well-being in these trying times. The energy sector is in the midst of one of the most challenging macro environments ever faced with dramatic changes to supply and demand. Our organization has continued to function seamlessly through this disruption as we've responded swiftly to market conditions and government measures. Our first quarter results, particularly with respect to Hawaii, illustrate the rolling impact of demand destruction on the refining sector. Singapore refined product cracks declined rapidly during February after the initial Chinese lockdown. While cracks dropped immediately, crude oil differentials did not begin to decline until the physical supply market loosened when refiners cut runs. and the supply chain in the Pacific Basin creates a long lag between market change and realized crude oil differentials. As a result, we experienced an intense period of weak cracks and strong differentials. The tight crude market collapsed even further during March when OPEC Plus failed to agree on production cuts. After the market share war began, the market structure flipped from backwardation to steep contango. Our waterborne crude supply chain changed dramatically, which will improve our cost of crude beginning in the latter part of the second quarter. These trends are largely related to our Hawaii refining profitability. Our mainland locations were principally impacted after United States social distancing regulations were enacted during mid-March. As we look to the rest of the year, our perspective on product demand is quite limited and linked directly to relaxation of social distancing and other protective measures. While the timing is uncertain, much of the demand destruction for our industry is temporary. Consequently, our business posture prioritizes flexibility and optionality. Broadly, we expect to see a gradual increase in gasoline demand before any changes in jet fuel demand occur. We expect diesel demand, which has held up well through the early stages of this pandemic, to be weakened by declining industrial production. We're fortunate to be market leaders in our niche markets, and we intend to run our refineries solely to meet local market demand. We're confident that our local refining and logistics operations will be the low-cost suppliers to our market. However, as market demand evolves, we must address changing needs. For example, the Hawaii market demand dropped from 120,000 barrels to 65,000 barrels per day immediately after quarantine and stay-at-home orders were implemented. Declining commercial jet arrivals and departures created most of this demand destruction. Our team took early action to reduce Hawaii production by shutting down one of our bridge units, reducing refined product import, and limiting refining activities to the original PARP Pacific facility. As you know, we previously operated that plant on a standalone basis with low operating costs and high operational reliability. We will operate in this fashion until a significant resumption in commercial jet traffic occurs. Washington continues to perform well, benefiting from favorable inland crude prices and reasonable local demand. Although Wyoming reported excellent operational performance again during this quarter, the falling crude price environment hampered profitability due to significant FIFO losses. With the stabilization and eventual increase in WTI crude oil prices, we expect a profitable contribution from Wyoming. We also believe the summer and fall driving season in the Rockies could be strong as the public chooses to drive and vacation outdoors. Our logistics and retail segments continue to bolster overall results during the first quarter. Retail margins were especially strong, which mitigated some of the decrease in fuel demand due to social distancing restrictions. Our team has responded rapidly to the market impact of the COVID-19 pandemic. The actions we are taking simultaneously attack multiple key focus areas, including safety, production alignment, business continuity, cost reduction, and balance sheet management. We anticipated declining demand with efforts that began during late February, and we intensified these activities when the pandemic began to spread globally. As a result of these efforts, We have reduced our planned cash outlays in 2020 by approximately $150 million. We will continue to focus on reducing our cost structure and expect to further increase the reduction in cash outlays in the second quarter. In light of the current environment, the independent members of the Board and I have reduced our cash salaries by 75% effective May 5th. We remain committed to supplying our local markets and are well-positioned to ramp up throughput at all our locations when demand recovers. The health and well-being of our employees, communities and stakeholders remain paramount, and we're following all local, state and federal guidelines in managing our response to COVID-19. At this time, I'd like to turn the call over to Joseph.