Par Pacific Faces Post-Turnaround Test As Wider Hawaii Crude Costs Meet Still-Rich Margins

Par Pacific just delivered the kind of quarter refiners dream about, earning $10.10 a share on a combined refining index near $33 a barrel. The question for its third-quarter report is how much of that windfall survives once the costs of the Hawaii turnaround work through the numbers. Management told investors to expect a dip. The market now wants to know whether it is a shallow dip or a deeper one.

Wall Street expects earnings of $6.57 a share on revenue of roughly $2.16 billion. That would be about a third below the second-quarter result but still 10.4% above the $5.95 earned a year ago, on revenue growth of 7.3%. That year-ago figure included a small refinery exemption benefit, so matching it on margins alone would be a meaningful achievement. The Earnings Whisper sits slightly higher at $6.70. That is a modest gap, but it suggests the more engaged crowd sees some room for upside rather than a reset lower. The company did not issue formal earnings guidance. Its operating commentary, however, serves as a detailed roadmap.

That roadmap carried several headwinds. Management guided the Hawaii crude differential to $11.50 to $13.50 a barrel, up from $4 to $5 in the second quarter, citing higher freight and steeper backwardation. It also warned that Hawaii capture would fall below its usual 100% to 110% range as costly pre-turnaround import barrels are expensed. Montana coker maintenance adds $6 million to $8 million of operating expense, and the July index of $31.34 was already about $1.60 below the second-quarter average. A beat would most likely come from stronger margins later in the quarter, or from Hawaii capture landing closer to the normal range than feared. A miss would point to crude cost volatility outweighing the market tailwinds management has called structural, including reduced Persian Gulf and Russian product exports and cautious Asian refinery runs.

Several other items will shape how the quarter is judged. The $312 million working capital outflow from the pre-turnaround inventory build was expected to reverse, provided prices held steady. Evidence of that reversal would strengthen the case that the balance sheet repair is durable. Liquidity reached about $1.4 billion after the inaugural $500 million unsecured notes deal. The timing of the 2025 exemption decision, worth up to roughly $300 million in a full award, was uncertain ahead of the September 1 deadline, so any update could swing sentiment sharply. Renewable diesel, which recorded its first commercial sales and ran near 3,000 barrels a day in June, now needs to show it can run steadily after the turnaround. Logistics should also benefit as crude imports into Hawaii resume. Further out, the near exhaustion of the roughly $700 million NOL points to higher cash taxes in 2027.

The mood has cooled noticeably. Sentiment has swung from mildly bullish before the last report to about 25% bearish now. Yet the stock has held its ground, edging up 0.2% since the last report while the S&P 500 slipped 1.4%. At $83.17, shares sit well above the 200-day moving average of $63.33 and in the upper part of their post-earnings range of $64.98 to $90.74. They are not close enough to that high to call a breakout. In effect, the market has kept the summer gains while shrinking expectations, which leaves room for relief if results land well.

The central issue is whether Par Pacific can show that its earnings power stays elevated once the turnaround is behind it. With no major downtime planned for the rest of the year, investors will look for a clean bridge from a costly third quarter to a stronger fourth. If capture rebounds and cash returns from working capital, the step change in earnings looks lasting. If not, the second quarter may come to look like a peak.

This earnings preview was originally published on Earnings Whispers.

This article is for informational purposes only and is not investment advice. Earnings Whispers and its staff may hold positions in the securities mentioned. It is AI-assisted, based on proprietary Earnings Whispers data and company reports, and edited by Earnings Whispers staff.