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.

Thank you, Bill. Starting with Wyoming, three to one index for the first quarter, was $15.86 per barrel, consistent with past seasonal trends. The significant reduction in crude prices during the month of March resulted in approximately $10 per barrel of unfavorable FIFO impact. As a result, our realized just gross margin was a negative $0.81 per barrel. Our refinery throughput averaged approximately 16,000 barrels per day, with 99.7% operational availability and production costs were $6.51 per barrel. COVID-19 started to impact Rocky Mountain's demand for gasoline and jet fuel around mid-March, reducing Path 4 refining utilization rate under 65% through the month of April. Diesel demand has remained strong with a much lower COVID-19 impact thus far, supporting our maximum diesel production mode of operation up from a typical 30% to approximately 43% of total yield. To balance demand, our target throughput for the second quarter is at the 12,000 to 14,000 barrels per day range. In Washington, Our Pacific Northwest 5-2-2-1 index was $13.24 per barrel on ANS basis. Our refinery throughput averaged approximately 41,000 barrels per day, reflecting a strong 100% operational availability. Adjusted cost margin in the first quarter was $9.14 per barrel, and production costs were $3.40 per barrel. Pat-5 refining utilization rates are down to approximately 60% in April as a result of COVID-19 impact on demand. So far, our relatively low gasoline yield configuration has effectively protected us from the decline in West Coast demand. In addition, our unit train and barge operations continue to provide us with valuable flexibility in crude oil sourcing. As a result, our second quarter target throughput is at the 37 to 40,000 barrels per day range. To balance our production with demand, we are minimizing gasoline and jet production and maximizing VGO and diesel use in our system LSFO blending activities. In Hawaii, our 312 Singapore index was $8.11 per barrel on Brent-based. The finally throughput averaged approximately 95,000 barrels per day and a quarter as a result of lower demand for oil products in the state of Hawaii. Operational availability was strong, 99.7%, and production costs were $3.36 per barrel. Waterborne good pricing continues to impact our Hawaii refining operations. Our first quota realized adjusted cost margin in Hawaii was only... A number? 21. was only $0.24 per barrel. Our low capture was driven by elevated crude differentials, resulting in a realized $7.04 per barrel premium to Brent on delivery basis. Second quarter differentials have improved to approximately $4 per barrel, reflecting the oil market condition at the time we committed and purchased the crude oil. mostly between January and March. With the recent crude oil and macro changes outlined by Bill, the bottom line is that our third quarter crude differentials are likely to be about $10 per barrel more favorable than our first quarter differential. On the positive side, COVID-19 demand destruction in Hawaii has been approximately 50% through the month of April. with jet fuel demand cut by approximately 75% and gasoline demand cut by 40 to 50%. As a result, we have adjusted our operations to balance yields with demand. Second quarter of planned throughput in Hawaii is in the 70 to 74,000 barrels per day range. We shut down our goods unit on the west side and adjusted our staffing accordingly. for the current operation. We are aggressively minimizing jet production from our typical 30% down to 15 to 20% of total yield. At this level, we sell our entire jet production, mainly to the military and freight customers. We have also reduced gasoline yield and increased fuel oil yield to match as close as possible and the current demand profile in Hawaii, including utility fuels for power generation. In summary, we are focused on what we can control as we navigate our system through this pandemic crisis and the demand recovery phase. We remain optimistic and excited about our future as an efficient and competitive system. And now, I will turn the call over to Will to review our financial results.

Thank you, Joseph. First quarter adjusted EBITDA and adjusted earnings totaled $11 million and a loss of $30 million, or $0.57 per fully diluted share. Focusing on accounting items first, there are two items that impacted both adjusted EBITDA, adjusted earnings, and GAAP net income. One, Wyoming refining results include an approximate $15 million FIFO accounting loss, and two, Hawaii Refining recognized an approximate $6 million in realized derivative losses related to the approximately $5 million gain that was called out during the fourth quarter of 2019. In addition, there were three items that solely impacted GAAP net income. One, we recorded a non-cash lower cost-for-market charge of approximately $182 million. Related to the LCM charge, Shifting to segment results. Retail adjusted EBITDA contribution was $15 million, driven by increased fuel margins, primarily during the March timeframe. Same-store sales fuel volumes were down roughly 5.2%, while merchandise sales were up approximately 2.1% compared to the first quarter of 2019. We expect gasoline demand to be down approximately 40% to 50% on a year-over-year basis until social distancing restrictions are relaxed in Hawaii, Washington, and northwestern Idaho. Diesel demand is down but has been more resilient, and our merchandise sales have been much stronger as customers turn to our stores at times when social distancing measures make larger format retail locations more cumbersome to access. Our prompt views of late April and early May suggest volumes are rebounding from trough levels referenced above. The logistics segment adjusted EBITDA contribution was $23 million, with increased throughput across principally Hawaii and Washington during the quarter. We saw minimal impacts to throughput other than late March reductions across certain locations, which did not have a material impact on the quarter's results. We expect annualized logistics segment results to proportionately move with throughput rates at our respective refining locations. The refining segment recorded segment adjusted EBITDA loss of $15 million. Hawaii results reflect the impact of lagged crude differentials paired with compressed crack spreads. As a reminder, Q1 Hawaii crude differentials reflect Q4 2019 market conditions were elevated freight and backwardation drove a tight Pacific Basin crude market. Partially offsetting Hawaii's results was a seasonally strong Washington performance and a modest Wyoming contribution, excluding the FIFO crude impacts. Washington's inland crude advantage was on display as Bakken and Cold Lake crews traded at attractive delivered discounts to ANS. Laramie generated adjusted EBITDAX of $12 million and net income of $1 million for Q1 2020. Net to our interest, Laramie's results reduced our adjusted earnings by $1 million. Laramie has extended the term of its credit facility through 2021 and current leverage sits at 2.9 times that EBITDA. Moving to the capital structure and liquidity front. Our ending liquidity totaled $137 million, made up of $62 million in cash and $75 million in availability. The decline in the headline liquidity for the quarter was principally driven by the reduction in the underlying collateral value of each intermediation or ABL credit facility. Of the approximate $105 million decline versus year-end 2019, over $90 million was from the reductions in collateral value. However, This reduction in availability should be viewed in the context of our current operations and daily required crude oil purchases through our refineries, which in a $25 Brent and $20 WTI world is approximately $3 million per day, compared to nearly $10 million per day in a $60 Brent and $55 WTI world. In other words, while the decline in commodity prices has impacted our liquidity, It also reduces our daily cash operating requirements. We generated cash from operations $15 million. Working capital was a source of funds, excluding the non-cash impacts from intermediation revaluations, and was principally used to pay down the deferred payment facilities within the financing sections of our cash flow statement by approximately $52 million. Capital expenditures and turnaround outlays totaled approximately $17 million and cash interest equaled $15 million. We are taking a number of actions to reduce our total operating expenses, capital expenditures, and turnaround outlays in response to the current environment. Thus far, we have identified approximately $150 million in annualized total reductions versus our 2020 planned outlays consisting of The largest driver of the $65 to $70 million reduction in cost of goods sold is reduced internal fuel burn. of between $45 to $50 million within our refineries, followed by projected reductions in our supply and offtake fees, which flow through our cost of goods sold, of $15 to $20 million. OPEX reductions are a combination of reduced Hawaii refining operations and deferrals of non-critical expenditures across all segments. Our capital expenditure reductions and turnaround outlay reductions were approximately 60% maintenance and 40% growth. Our revised capital expenditure and turnaround outlay outlook for the full year is now $95 to $110 million, with the majority of this scheduled for the second half of the year. These actions demonstrate our commitment to navigating this environment. This concludes our prepared remarks. Operator, I'll turn it back to you for Q&A.

Thank you. We will now begin the question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then 2. We will pause for a moment as callers join the queue. Our first question comes from Neil Mehta with Goldman Sachs. Please go ahead.

Hi, good morning. This is Carly on for Neil. Thanks very much for taking the questions. Good morning. The first one was just around the $150 million reduction in the cash outlays. Thanks for the color on kind of walking through some of the key line items driving that reduction. Just curious on your thoughts on if any of that should be viewed as structural versus just cyclical in response to the current environment.

Sure. I mean, I think the cost of goods sold reductions we're referencing of 65 to 70 million are correlated to the price of oil. So depending on your structural view of the price of oil, I think that's repeatable. So and again, in a low price environment, we think those benefits flow through. Again, the OPEX reductions are a reflection of reduced activity in Hawaii. So to the extent we increase activity levels there, you'd see that return. And again, I think we've deferred a number of expenses to future years.

Great, thanks. And then the follow-up is just around Hawaii. Can you talk a little bit about what you're seeing real-time from a demand perspective in that market, particularly as it relates to jet fuel? Could you also touch upon how operations around crude slate and product yields have been flexed in order to address the changes that you've seen in that market?

Sure, Carly. This is Bill. Let me address the changes in the market, and then I'll let Joseph handle the discussion on the crude yield or the product yield in the crude slate. Generally speaking, as you know, when the governor announced the quarantine, Our jet fuel demand or commercial jet traffic dropped within literally a 72-hour period. And that demand in the past has been as high as 50,000 barrels a day in peak season. That's including all demand on commercial, military, and cargo. When the commercial jet activity dropped, we've really dropped down virtually to only cargo and military at this point. 45,000 to 50,000 barrels a day, depending on the seasonality, has gone down to the 12,000 to 15,000 barrels a day level. And that's, again, really related principally to military cargo and some commercial jet traffic, but even the commercial jet traffic that I think we are seeing is somewhat cargo related because the load factors are so low. On the gasoline side, very different story. Very similar to the mainland. I think we probably bottomed at about 50% decline at the kind of peak of the shelter-in-place. We're seeing a trend up. We're probably up 20% from the bottom, i.e. we're probably closer to 65% today. I would say gasoline demand, probably only about 10% of gasoline demand is really related to the tourism market. So keep in mind 90% of the gasoline demand is a local demand factor. Thank you for joining us. have a much larger impact from the tourism trade. Joseph, do you want to handle?

Okay. We had to cut the production and match our yields to demand, stay feasible at a point where we actually sell everything that we make. So number one, we cut throughput by 40% by shutting down our power school unit. Number two, we cut our jet fuel production by almost 50% by Thank you. Thank you.

Our next question is from Matthew Blair with Tudor Picker and Hold. Please go ahead.

Good morning, Matthew. Hey, good morning, everybody. Hope everybody is safe. I was hoping you could talk about your exposure to Contango at all three of your refineries. For your mainland refineries, it looks like the WTI CMA market structure is showing about a $4.60 discount. So would you expect to capture 100% of that in Wyoming and in Washington? And then I guess for Hawaii, I guess, can you confirm that you do have exposure to the benefits of Brent Contango and walk us through maybe just how to think about modeling that?

Sure. Yeah, so Matthew, I think in Washington, again, we do have exposure to that with respect to most of our barrels and given the Way in which we hedge and the way our intermediation functions, we do capture the benefit of the WTI contango there. Again, I think that's evident in the way that our intermediation functions. In Hawaii, again, a similar dynamic is in place with the way the intermediation with J. Aaron functions. Again, I would say the benefit there is probably not dollar for dollar as we manage the exposure to the front of the curve and, again, tend to be spread out further down the curve than the majority of our barrels. That said, we do have a fair amount of exposure to the front of the curve there as we're using our tankage as another one of our assets in Hawaii to manage and optimize production. And Contango is one of those tools that's available to us, and with the intermediation, we can capture that.

Let me add in Hawaii, we mentioned going from a plus seven this quarter to plus four in the second quarter, going to minus three basically in the third quarter, a $10 per barrel improvement between first quarter to the third quarter. That contango you just mentioned is already built in, this differential. and will really help our competitive position in Hawaii.

Indeed, indeed. Okay, great. Thanks for the caller. I guess just turning to logistics, so results were strong for second quarter in a row. Just wanted to confirm, it kind of sounds like this low 20 million EBITDA number is kind of the baseline going forward. However, this number would be impacted by by lower runs at your refineries in Q2. Is that correct?

Yeah, Matthew, I think that's the right way to look at it. And if you plug through Joseph's numbers, again, from a throughput perspective, clearly the largest impacts in Hawaii. And again, I think that's where you'll see the proportional response on the logistics side. And again, I think Wyoming is It does have some reductions, but it's just a much smaller overall contributor to our logistics EBITDA profitability. And then you can see Washington, the reductions there are projected to be much smaller. So less impact through logistics on that front. And then I would generally mention that the increase this quarter was driven by increased throughput in Hawaii in particular. And that's really logistics throughput, not refining throughput. Very clear. Thanks, everybody. Thank you.

Our next question is from Brad Heffern with RBC Capital Markets. Please go ahead.

Hey, everyone. Good morning. Another question on Hawaii, just on the margin side of things. So, you know, obviously the indicator for April was, I think, minus two and change. You're talking about, you know, a $4 differential to Brent. So you're starting the quarter, it seems like, well behind on the margin front. But at the same time, I assume that Really, the indicator at this point isn't necessarily indicative of what's actually happening. So, can you talk about how we should think about capture versus these really sort of penal indicators in the second quarter?

Yeah, Brad, it's Will. I think one thing to keep in mind in the 312 today is that a third of that is jet fuel. And today, or let's say over the course of April, the spread between jet fuel and diesel has been... Thank you for joining us. I think that's one dynamic that's significant there. And then I think the other thing to consider is as you approach a zero bound for the 312 indicator, you are Typically, our contracts have a fixed adder to them. And so when you start trying to model capture off of a very low 312 indicator, again, you need to keep in mind that we've got a fixed adder on almost all of our refined product sales contracts. So keep that in mind. And then the other color I'd provide on the crude side is while we're at a $4 diff for the second quarter, There's a large spread between, let's say, the month of April and the month of June. And the June numbers are closer to what Joseph's indicating to expect in the third quarter. And so, again, I think April is really the timeframe where the residual lag on crude kind of fully works its way through our system.

And Brad, it's Bill. There's probably one other factor to take into consideration when you think about capture in the 312, and that is, as our jet declines, Bill and Will spoke about

Let me just add a couple of sentences about the market. I think it's very clear that a negative $2 per barrel quarter today is not feasible. And the definition of feasible is maintaining, you know, refiners in the mid-Pacific at cash flow long term to survive. Five years average have been $10 per barrel for this index. So there is about $12 per barrel up to recover. And the only question is how fast, timing. On the gasoline side, we are less concerned. We think that the markets are headed back to routine. We also think there will be a demand elasticity impact that will have gasoline. Consumers will drive more as the price is lower. We appreciate the jet fuel recovery is probably going to be slower, and we're going to watch this diesel. Long term, it's looking promising with the lowest impact from COVID-19, but we all know long term it has some industrial production and economy type of impact. So this is the market for now. We will watch it, and we'll wait for things to rebalance at a feasible point.

Okay, great. I appreciate all the detailed answers. And then I guess switching to the inland refineries or the mainland refineries, is there any chance that we see you move around the crude plates at either facility just given either shut-ins or the fact that WCS is trading so tight right now?

Thanks. Yeah, Brad, it's Will. I think, you know, keep in mind for Washington, we do have some flexibility there given our waterborne access. So we do have levers to pull. And then with respect to Wyoming, you know, keep in mind we're pipe connected and we also buy field barrels. So it gives us some flexibility to try and manage it as effectively as possible. There is no doubt that the producer in the inland United States is responding to low prices and we are seeing that. I think we're will use all available logistics options we've got to ensure that we keep the refineries supplied as economically as possible. Okay, thank you.

Our next question is from Jason Gabelman with Cowan. Please go ahead.

Hey, morning. I wanted to circle back on the OpEx cuts you announced. About a third of it I guess is related to the fuel burn that has to do with oil prices. So what's the delta or the price you're assuming for that fuel, just given there's been a lot of volatility in the crude price over the past few weeks and I guess several months, just having an understanding of what kind of the assumptions are that underpin that $50 million of savings? would be helpful.

Yeah, Jason, it was roughly the forward curve probably about two weeks ago. So let's just assume that it's, you know, on average for the rest of the year, you're probably looking at close to $30 Brent and $25 TI. Okay.

Great. That's helpful. And then my second question is just circling back on The Asian market. I mean, I think that a lot of indicators out there suggest some rebound in the Asian market, but margins remain low based on kind of the indicator margins that you've provided. Do you just discuss what dynamics are going on there that would keep margins depressed despite demand rebounding and Kind of how long do you think it's going to take until the margin environment improves there?

We think it's a short term. Inventories are starting to respond to people going back to routine. Negative pressure from inventory is starting already to impact gasoline cracks. And then jet fuel, you know, we will watch recovery. Same with ULSD. At the end of the day, refineries need to cash flow to stay online and are responding with cutting runs and slowing downs and supply demand is taking care of it.

I think what you see in the market today is a reflection of just the kind of imbalance that exists when you see this type of demand shock happen. And again, it's Thank you for joining us. Recently, you've seen clean product freight spike that's impacted the Singapore refined product cracks because, again, there are less options for those refiners that are out of olage that are trying to use floating storage to flex their supply chains to move barrels. So, again, I think as soon as you see that feasibility rebalance, I think you're going to see the margin profiles begin to regress toward the means.

Got it. Could I just sneak one more in just about this swing from $7 to, or I guess a $10 benefit on the landed costs in Hawaii? Part of that, I guess, is the contango, but then what's the other part driving that? Is that freight costs or is there something else in there?

Freight cost is actually offsetting the contango a little bit. The good contribution, when you have Contango, the motivation for floating storage is there, and it's pushing freight costs a little bit up, but the $10 per barrel improvement indication takes that already into account. The other key factor is just weakness in Kurnool. It's oversupply, and suppliers will do everything they can to move their Bill Barrow. And you have what Billy filled in his prepared comments on the supply side. You have supply war. And on the demand side, we have the COVID-19 shock. And the combination was very strong on goods for insurance.

I think, Jason, the other thing to Joseph's point, there's a large spread between the physical crude market and the financial crude market. And so, again, you know, we're quoting everything off of ice brim. and again, I think if you look at the dated Brent relationship to ice Brent, there's large discounts that are evident and we're capturing that as a physical buyer.

Got it. Thanks.

Once again, if you have a question, please press star then one on your telephone. And our next question is from Andrew Shapiro with Lone Dale Capital Management. Please go ahead.

Hi, thank you. With the past few impairment write-downs, what is Laramie's net book value left on our books? Just shy of a million dollars, Andrew. Okay, so not much more impairment risk there. Okay. If this drags on, or when we get a second wave in the flu season, have you guys already identified and many more.

The current demand environment for quite some period of time, but if it should drop even further, there are other actions that we'll take into consideration that would further reduce our cost structure.

Okay, so you feel like you have already adjusted to the current demand levels adequately? Yes, we have. And since you are on the ground, or your team is on the ground in Hawaii, and the state has kept its curve well under control as it and an island like New Zealand and Australia have done the same. What are you hearing about the state's reopening plans with respect to first off locals and then the timing or the steps necessary for it to open to tourism, which would obviously improve the jet demand?

Well, as you mentioned, it's actually a very safe place with respect to the pandemic. I think there have been fewer than 10 positive cases in the last week in Hawaii. And the governor has begun to discuss limited openings. They've done a really good job of tamping down the virus in Hawaii. The climate may help a little bit. So I think you're going to see an increase in activity within the main community there in the next month. Your question about tourism is something that really is just up in the air, and I couldn't really tell you what they're going to do at this point. Obviously, if they're bringing tourists into the state, they run the risk of introducing the virus and having an outbreak. So I think the state will be very careful and do what they can to ensure that they limit any ability or any risk associated with tourists entering the market.

And lastly, given that you're not going to be attending any in-person investor conferences for the foreseeable future, what are you doing to continue to, I don't want to use the word market per se, but to conduct investor relations for current and potential future shareholders and what, I guess, virtual conferences are on the calendar.

Yeah, Andrew, it's Will. I think at this point, we don't have any kind of current virtual conferences on the calendar. I think the typical scheduling is still, I think, reforming and reshaping with respect to how investor outreach is going to function in this environment. So, again, I think for the time being, we're ensuring that we're You know, reaching out to our known shareholders and ensuring that we're reaching out to prospective shareholders that, you know, we've either received reverse inquiry from or, again, have had historical dialogue with. Thank you, guys.

This conference was virtual with Scotia, and it was very successful, so we may see this activity coming back.

Yep.

Thank you.

Our next question is from Patrick Sheffield with Beach Point Capital. Please go ahead.

Hey, guys. Thanks for taking my question. Good morning. I just wanted to follow up on your liquidity position and just maybe a little more color on the cadence of the turnaround and cap-back spend. It sounds like, based on your guidance, you have $100 million left to spend. and Q2 is going to be the trough for EBITDA based on what you guys see today. Is that the right way to think about it? 136 million of liquidity and 100 million of capex needed for turnaround as well. How do you look at that playing out over the rest of the year?

Sure. So I think the best way to think about our liquidity is to start with our fixed charges, right? So let's just start with excluding the turnarounds. And basically, we've got quarterly capex requirements of about $15 million and cash interest and amortization of $16 million. So let's call that $30 million of quarterly fixed charges that we've got. and then if you just think about our retail and logistics businesses, right? So last year, our retail adjusted EBITDA averaged about $13 million quarterly and logistics averaged 19 and then layer on top our corporate overhead of about $11 million quarterly. So you add up all those pieces before you get to refining, you've got about $21 million a quarter of EBITDA. So I think even before you get to refining, so if you assume refining zero, contribution from the refining segment for the remainder of the year, which I'd say is close to where we were in Q1. If you exclude the Wyoming FIFO impact for refining, you're looking at approximately $10 million per quarter cash burn versus our ending March liquidity of $137 million. So I think that's probably the best way to think about it. And then I would just say, you know, keep in mind that the $90 million compression in collateral that I referenced that drove the decline in liquidity would start to increase if crude bounces off of what's called the March lows of $20 WTI and $22 Brent. So we're not planning on this, but I think it's worth watching. And I think with respect to the turnarounds, again, I think it's certainly our preference to conduct those on time as we've planned. I think there are alternatives that we have identified that if needed we can defer those further. So, again, I think we've also identified a series of smaller options to bolster liquidity should it be required, and I just say we'll continue to actively manage the balance sheet and further adjust our operations as we need to to respond to market conditions.

That's very helpful and a turnaround that Thank you for joining us.

The timing and the outflow of that, I think, is certainly very late in the year. It's not probably trickling into Q1 of 21.

Got it. And then, sorry, last question. I guess you did your retail average and logistics average based on last year. I guess we can just take logistics and flex it down by however much runs are going down. And then retail... Yeah, I think the logistics piece, the best thing to think about is just the Hawaii impact is probably the most meaningful.

to our logistics EBITDA during the second quarter. And then, again, retail. Again, without getting into the dynamic between margins and volume, keep in mind margins have continued to expand as the price falls faster, which was the case during April. So, again, there's dynamics with respect to both volume and margin to consider. Right. Awesome. Thanks.

I appreciate that. Appreciate the color. Thanks, guys.

This concludes the question and answer session. I would like to turn the conference back over to William Pate for any closing remarks.

Thank you for joining us today, everyone. We've certainly begun 2020 in a challenging environment. However, I remain confident in the durability of our business through the market cycle and our track record of delivering long-term value to our stakeholders. Thank you. Have a good day.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.