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美國
證券交易委員會
華盛頓特區20549
_________________________________________________________________
表格 10-Q
_________________________________________________________________
（標記一）
☒根據1934年證券交易法第13或15(d)節的季度報告
截至季度結束日期的財務報告2024年9月30日
或者
☐根據1934年證券交易法第13或15(d)節的轉型報告書
在從__________到__________的過渡時期
委員會備案號001-41325
_________________________________________________________________
HF SINCLAIR CORPORATION
(根據其章程規定的註冊人準確名稱)
特拉華州87-2092143
（國家或其他管轄區的
公司成立或組織）		（納稅人識別號碼）
2828 N. Harwood， Suite 1300
達拉斯, 得克薩斯州
75201
，（主要行政辦公地址）(郵政編碼)
(214) 871-3555
(註冊人電話號碼，包括區號)
_________________________________________________________________

（前名稱、地址及財政年度，如果自上次報告以來有更改）
根據1934年證券交易法第12(b)條註冊的證券:
每一類的名稱交易標誌在其上註冊的交易所的名稱
普通股票，每張面值0.01美元DINO請使用moomoo賬號登錄查看New York Stock Exchange
用複選標記表明註冊人（1）在過去的12個月中（或註冊人需要提交此類報告的較短期限）是否提交了1934年《證券交易法》第13或15（d）條要求提交的所有報告，以及（2）在過去的90天中是否受此類申報要求的約束。 是的  ☒沒有☐
請勾選以下內容。申報人是否已在過去12個月內（或申報人需要提交此類文件的時間較短的期間內）逐個以電子方式提交了根據規則405提交的互動數據文件。這章的交易中規定。    是  ☒    否  ☐
請勾選註冊者是大型加速文件提交者、加速文件提交者、非加速文件提交者、小型報告公司還是新興增長公司。請參見《證交易法》規則120億.2 中「大型加速文件提交者」、「加速文件提交者」、「小型報告公司」和「新興增長公司」的定義。
大型加速報告人☒加速文件申報人☐非加速文件提交人☐更小的報告公司☐
新興成長公司☐
如果是新興成長型企業，請勾選複選標記，表明註冊者已選擇不使用延長過渡期來符合根據證券交易法第13(a)條規定提供的任何新財務會計準則。 ☐
請勾選：註冊人是否爲外殼公司（根據《交易所法案》120億.2規定定義）。是 ☐    否  ☒
188,151,863 2024年10月28日，普通股股票每股面值0.01美元，已發行股數。





HF SINCLAIR CORPORATION
指數
 
 
第一部分 財務信息
2024年9月30日（未經審計）和2023年12月31日
Three and Nine Months Ended September 30, 2024 and 2023
Three and Nine Months Ended September 30, 2024 and 2023
2024年和2023年截至9月30日的九個月
2024年和2023年截至9月30日的三個月和九個月
2

目錄
前瞻性聲明

本文件中對HF Sinclair Corporation（「HF Sinclair」）的提及包括HF Sinclair及其合併子公司。在本文件中，「我們」，「我們的」，「我們的」及「我們」僅指HF Sinclair及其合併子公司或HF Sinclair或某個子公司，而不指任何其他人員，除非另有規定。本文件中對Holly Energy Partners, L.P.（「HEP」）在2023年12月1日HEP與HF Sinclair全資子公司合併完成之前的時間段的提及，指的是HEP及其合併子公司。

本季度10-Q表格中包含根據聯邦證券法的定義屬於「前瞻性聲明」的某些聲明。除本季度10-Q報告中包含的歷史事實聲明外，在「運營結果」、「流動性和資本資源」以及第I部分第2項「管理層對財務狀況和運營結果的討論與分析」下，以及第II部分第1項「法律訴訟」中的那些聲明均屬於前瞻性聲明。前瞻性聲明使用諸如「預計」、「展望」、「將」、「期待」、「計劃」、「目標」、「預測」、「策略」、「打算」、「應該」、「將會」、「可以」、「相信」、「可能」等表達方式，並涉及我們對未來業務計劃和目標的描述。這些聲明基於管理層的信念和假設，使用當前可用信息和在本文件日期爲止的期望，不保證未來績效，涉及特定風險和不確定性。所有關於我們對未來運營結果的期望的聲明都是基於對我們現有運營的預測，並不包括任何未來收購可能造成的潛在影響。儘管我們相信這些前瞻性聲明所反映的期望是合理的，但我們無法向您保證我們的期望會被證明是正確的。因此，實際結果和績效可能會與這些聲明中所表達、暗示或預測的有重大差異。任何差異可能由多種因素引起，包括但不限於：

•對原料、原油和成品的需求和供應存在不確定性，包括關於公司應對氣候變化和溫室氣體排放增加社會期望的不確定性；
•關於實際或潛在競爭性供應商和運輸商在我們市場上提供的精煉石油產品、潤滑油和特種產品的行動，存在風險和不確定性；
•精煉產品市場價格與wti原油市場價格之間的價差；
•關於精煉產品、潤滑油和特種產品運輸可能受限的可能性；
•the possibility of inefficiencies, curtailments or shutdowns in refinery operations or pipelines, whether due to reductions in demand, accidents, unexpected leaks or spills, unscheduled shutdowns, infection in the workforce, weather events, global health events, civil unrest, expropriation of assets, and other economic, diplomatic, legislative, or political events or developments, terrorism, cyberattacks, vandalism or other catastrophes or disruptions affecting our operations, production facilities, machinery, pipelines and other logistics assets, equipment, or information systems, or any of the foregoing of our suppliers, customers, or third-party providers, and any potential asset impairments resulting from, or the failure to have adequate insurance coverage for or receive insurance recoveries from, such actions;
•the effects of current and/or future governmental and environmental regulations and policies, including compliance with existing, new and changing environmental, health and safety laws and regulations, related reporting requirements and pipeline integrity programs;
•the availability and cost of our financing;
•the effectiveness of our capital investments and marketing strategies;
•our efficiency in carrying out and consummating construction projects, including our ability to complete announced capital projects on time and within capital guidance;
•our ability to timely obtain or maintain permits, including those necessary for operations or capital projects;
•our ability to acquire complementary assets or businesses to our existing assets and businesses on acceptable terms and to integrate any existing or future acquired operations and realize the expected synergies of any such transaction on the expected timeline;
•the possibility of vandalism or other disruptive activity, or terrorist or cyberattacks, and the consequences of any such activities or attacks;
•uncertainty regarding the effects and duration of global hostilities, including shipping disruptions in the Red Sea, the Israel-Gaza and Hezbollah conflict, the Russia-Ukraine war, and any associated military campaigns which may disrupt crude oil supplies and markets for our refined products and create instability in the financial markets that could restrict our ability to raise capital;
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•general economic conditions, including economic slowdowns caused by a local or national recession or other adverse economic condition, such as periods of increased or prolonged inflation;
•limitations on our ability to make future dividend payments or effectuate share repurchases due to market conditions and corporate, tax, regulatory and other considerations; and
•other business, financial, operational and legal risks and uncertainties detailed from time to time in our Securities and Exchange Commission filings.

Cautionary statements identifying important factors that could cause actual results to differ materially from our expectations are set forth in this Quarterly Report on Form 10-Q, including without limitation the forward-looking statements that are referred to above. You should not put any undue reliance on any forward-looking statements. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements set forth under the heading “Risk Factors” included in Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2023 and in Part II, Item 1A in this Quarterly Report on Form 10-Q as well as discussion in this Quarterly Report on Form 10-Q in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the headings “Outlook” and “Liquidity and Capital Resources.” All forward-looking statements included in this Quarterly Report on Form 10-Q and all subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. The forward-looking statements speak only as of the date made and, other than as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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DEFINITIONS

Within this report, the following terms have these specific meanings:

“Adjusted refinery gross margin per produced barrel sold” is total Refining segment gross margin plus Lower of cost or market inventory valuation adjustments, Depreciation and amortization and Operating expenses, divided by sales volumes of produced refined products sold. This margin measure does not include the non-cash effects of Lower of cost or market inventory valuation adjustments, which relate to volumes in inventory at the end of the period.

“BPD” means the number of barrels per calendar day of crude oil or petroleum products.

“BPSD” means the number of barrels per stream day (barrels of capacity in a 24 hour period) of crude oil or petroleum products.

“Base oil” is a lubricant grade oil initially produced from refining crude oil or through chemical synthesis that is used in producing lubricant products such as lubricating greases, motor oil and metal processing fluids.

“LPG” means liquid petroleum gases.

“Lubricant” or “lube” means a solvent neutral paraffinic product used in commercial heavy duty engine oils, passenger car oils and specialty products for industrial applications such as heat transfer, metalworking, rubber and other general process oil.

“MMBTU” means one million British thermal units.

“Renewable diesel” means a diesel fuel derived from renewable feedstock such as vegetable oil or animal fats that is produced through various processes, most commonly through hydrotreating, reacting the feedstock with hydrogen under temperatures and pressure in the presence of a catalyst.

“RINs” means renewable identification numbers and refers to serial numbers assigned to credits generated from renewable fuel production under the Environmental Protection Agency’s Renewable Fuel Standard regulations, which require blending renewable fuels into the nation’s fuel supply. In lieu of blending, refiners may purchase these transferable credits in order to comply with the regulations.

“Sour crude oil” means crude oil containing quantities of sulfur greater than 0.4 percent by weight, while “sweet crude oil” means crude oil containing quantities of sulfur equal to or less than 0.4 percent by weight.

“Wax crude oil” is a low sulfur, low gravity crude oil produced in the Uinta Basin in Eastern Utah that has certain characteristics that require specific facilities to transport, store and refine into transportation fuels.

“White oil” is an extremely pure, highly-refined petroleum product that has a wide variety of applications ranging from pharmaceutical to cosmetic products.

“WTI” means West Texas Intermediate and is a grade of crude oil used as a common benchmark in oil pricing. WTI is a sweet crude oil and has a relatively low density.


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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
HF SINCLAIR CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
September 30, 2024December 31, 2023
 (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents$1,229,482 $1,353,747 
Accounts receivable, net: Product and transportation1,187,864 1,527,950 
                                          Crude oil resales139,696 197,169 
1,327,560 1,725,119 
Inventories: Crude oil and refined products (Note 7)
2,412,431 2,645,724 
                     Materials, supplies and other275,249 276,107 
2,687,680 2,921,831 
Income taxes receivable47,907 56,528 
Prepayments and other63,513 89,229 
Total current assets5,356,142 6,146,454 
Properties, plants and equipment, at cost10,814,724 10,533,432 
Less: accumulated depreciation(4,271,458)(3,906,600)
6,543,266 6,626,832 
Operating lease right-of-use assets363,507 348,006 
Other assets: Turnaround costs701,795 644,957 
                      Goodwill 2,977,842 2,977,744 
                      Intangibles and other945,109 972,272 
4,624,746 4,594,973 
Total assets$16,887,661 $17,716,265 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable$2,016,049 $2,205,759 
Income taxes payable19,891 8,772 
Operating lease liabilities78,181 106,973 
Current debt (Note 11)
350,000 — 
Accrued liabilities (Note 8)
498,718 453,045 
Total current liabilities2,962,839 2,774,549 
Long-term debt, net (Note 11)
2,286,805 2,739,083 
Noncurrent operating lease liabilities 309,967 249,479 
Deferred income taxes
1,239,463 1,297,130 
Other long-term liabilities (Note 8)
418,177 418,726 
Total liabilities7,217,251 7,478,967 
Commitments and Contingencies (Note 15)
Equity:
HF Sinclair stockholders’ equity:
Preferred stock, $1.00 par value – 5,000,000 shares authorized; none issued
— — 
Common stock, $0.01 par value – 320,000,000 shares authorized; 223,231,546 shares issued as of September 30, 2024 and December 31, 2023, respectively
2,232 2,232 
Additional capital6,001,233 5,993,661 
Retained earnings5,479,152 5,379,182 
Accumulated other comprehensive loss (Note 14)
(19,296)(11,784)
Common stock held in treasury, at cost – 35,079,683 and 23,235,599 shares as of September 30, 2024 and December 31, 2023, respectively
(1,859,638)(1,194,201)
Total HF Sinclair stockholders’ equity9,603,683 10,169,090 
Noncontrolling interest66,727 68,208 
Total equity9,670,410 10,237,298 
Total liabilities and equity$16,887,661 $17,716,265 
See accompanying notes.
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HF SINCLAIR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)

 Three Months Ended September 30,Nine Months Ended September 30,
 2024202320242023
Sales and other revenues (Note 3)
$7,207,140 $8,905,471 $22,080,116 $24,304,259 
Operating costs and expenses:
Cost of sales: (1)
Cost of materials and other (2)
6,158,294 6,935,650 18,835,319 19,313,312 
Lower of cost or market inventory valuation adjustments (Note 7)
202,307 (43,848)(20,186)(4,114)
Operating expenses
629,573 622,532 1,828,002 1,808,715 
6,990,174 7,514,334 20,643,135 21,117,913 
Selling, general and administrative expenses (1)
118,014 124,213 326,246 347,514 
Depreciation and amortization209,716 195,562 613,765 558,905 
Asset impairments9,984 — 9,984 — 
Total operating costs and expenses7,327,888 7,834,109 21,593,130 22,024,332 
Income (loss) from operations(120,748)1,071,362 486,986 2,279,927 
Other income (expense):
Earnings of equity method investments8,151 3,009 23,612 10,436 
Interest income18,309 24,577 58,983 62,103 
Interest expense(40,396)(48,686)(126,536)(141,490)
Gain on foreign currency transactions1,401 860 1,475 2,478 
Gain on sale of assets and other1,936 8,954 3,691 11,737 
(10,599)(11,286)(38,775)(54,736)
Income (loss) before income taxes:(131,347)1,060,076 448,211 2,225,191 
Income tax expense (benefit) (Note 10):
Current7,662 208,265 106,533 393,089 
Deferred(64,928)26,750 (54,343)87,551 
(57,266)235,015 52,190 480,640 
Net income (loss)(74,081)825,061 396,021 1,744,551 
Less: net income attributable to noncontrolling interest1,863 34,139 5,513 92,702 
Net income (loss) attributable to HF Sinclair stockholders$(75,944)$790,922 $390,508 $1,651,849 
Earnings (loss) per share attributable to HF Sinclair stockholders:
Basic$(0.40)$4.23 $2.01 $8.57 
Diluted$(0.40)$4.23 $2.01 $8.57 
Average number of common shares outstanding:
Basic189,840 185,456 193,341 191,047 
Diluted189,840 185,456 193,341 191,047 

(1)Exclusive of Depreciation and amortization.
(2)Exclusive of Lower of cost or market inventory valuation adjustments.

See accompanying notes.
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HF SINCLAIR CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In thousands)
 
 Three Months Ended September 30,Nine Months Ended September 30,
 2024202320242023
Net income (loss)$(74,081)$825,061 $396,021 $1,744,551 
Other comprehensive income (loss):
Foreign currency translation adjustment10,188 (13,471)(7,659)(693)
Hedging instruments:
Change in fair value of cash flow hedging instruments
(62)(3,506)(5,110)(3,236)
Loss reclassified to net income on settlement of cash flow hedging instruments
518 3,506 5,110 3,236 
Net unrealized gain on hedging instruments456 — — — 
Pension and other post-retirement benefit obligations:
Pension plans (gain) loss reclassified to net income437 (45)869 (135)
Post-retirement healthcare plans gain reclassified to net income(933)(918)(2,790)(2,754)
Retirement restoration plan loss reclassified to net income6 3 16 9 
Net change in pension and other post-retirement benefit obligations(490)(960)(1,905)(2,880)
Other comprehensive income (loss) before income taxes10,154 (14,431)(9,564)(3,573)
Income tax expense (benefit)2,137 (3,067)(2,052)(843)
Other comprehensive income (loss)8,017 (11,364)(7,512)(2,730)
Total comprehensive income (loss)(66,064)813,697 388,509 1,741,821 
Less: noncontrolling interest in comprehensive income1,863 34,139 5,513 92,702 
Comprehensive income (loss) attributable to HF Sinclair stockholders$(67,927)$779,558 $382,996 $1,649,119 

See accompanying notes.

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HF SINCLAIR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 Nine Months Ended September 30,
 20242023
Cash flows from operating activities:
Net income$396,021 $1,744,551 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization613,765 558,905 
Asset impairments9,984 — 
Lower of cost or market inventory valuation adjustments
(20,186)(4,114)
Earnings of equity method investments, net of distributions
(6,874)6,646 
Gain on sale of assets(1,503)(7,718)
Deferred income taxes(54,343)87,551 
Equity-based compensation expense15,835 26,368 
Change in fair value – derivative instruments(10,284)4,396 
(Increase) decrease in current assets:
Accounts receivable395,294 (245,337)
Inventories247,960 83,068 
Income taxes receivable8,548 24,568 
Prepayments and other22,750 27,729 
Increase (decrease) in current liabilities:
Accounts payable(184,042)42,547 
Income taxes payable11,117 129,346 
Accrued liabilities43,483 82,123 
Turnaround expenditures(258,771)(471,076)
Other, net21,640 (22,982)
Net cash provided by operating activities1,250,394 2,066,571 
Cash flows from investing activities:
Additions to properties, plants and equipment(296,921)(261,437)
Proceeds from sale of assets2,275 16,474 
Investment in Osage Pipe Line Company, LLC
(6,000)(4,750)
Distributions from equity method investments in excess of equity earnings6,043 1,993 
Net cash used for investing activities(294,603)(247,720)
Cash flows from financing activities:
Borrowings under credit agreements— 60,000 
Repayments under credit agreements(105,500)(149,500)
Purchase of treasury stock(667,340)(833,623)
Dividends(290,538)(258,856)
Distributions to noncontrolling interests(6,994)(76,961)
Payments on finance leases(8,044)(9,332)
Other, net(310)(1)
Net cash used for financing activities(1,078,726)(1,268,273)
Effect of exchange rate on cash flow(1,330)(893)
Cash and cash equivalents:
Net change for the period(124,265)549,685 
Cash and cash equivalents at beginning of period1,353,747 1,665,066 
Cash and cash equivalents at end of period$1,229,482 $2,214,751 
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest$(105,196)$(119,752)
Income taxes, net$(85,960)$(240,347)
Decrease in accrued and unpaid capital expenditures$(10,396)$(12,187)
See accompanying notes.
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HF SINCLAIR CORPORATION
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(In thousands, except per share data)

Three Months Ended September 30, 2024
Common Stock Additional CapitalRetained EarningsAccumulated Other Comprehensive LossTreasury StockNon-controlling InterestTotal
Equity
SharesAmountSharesAmount
Balance at June 30, 2024223,231$2,232 $5,996,600 $5,650,373 $(27,313)32,416$(1,731,960)$67,182 $9,957,114 
Net income (loss)
— — — (75,944)— — — 1,863 (74,081)
Dividends ($0.50 declared per common share)
— — — (95,277)— — — — (95,277)
Other comprehensive income, net of tax— — — — 8,017 — — — 8,017 
Issuance of common shares under incentive compensation plans— — (117)— — (2)117 — — 
Equity-based compensation— — 4,750 — — — — — 4,750 
Purchase of treasury stock, inclusive of excise tax— — — — — 2,666 (127,795)— (127,795)
Distributions to noncontrolling interest holders— — — — — — — (2,318)(2,318)
Balance at September 30, 2024223,231$2,232 $6,001,233 $5,479,152 $(19,296)35,080$(1,859,638)$66,727 $9,670,410 


Three Months Ended September 30, 2023
Common Stock Additional CapitalRetained EarningsAccumulated Other Comprehensive LossTreasury StockNon-controlling InterestTotal
Equity
SharesAmountSharesAmount
Balance at June 30, 2023223,231$2,232 $6,480,581 $4,815,908 $(13,379)30,918$(1,576,390)$781,752 $10,490,704 
Net income— — — 790,922 — — — 34,139 825,061 
Dividends ($0.45 declared per common share)
— — — (83,585)— — — (83,585)
Other comprehensive loss, net of tax— — — — (11,364)— — — (11,364)
Issuance of common shares under incentive compensation plans— — (43)— — (1)43 — — 
Equity-based compensation— — 11,104 — — — — 370 11,474 
Purchase of treasury stock, inclusive of excise tax— — — — — 11,275(591,347)— (591,347)
Distributions to noncontrolling interest holders— — — — — — — (25,676)(25,676)
Balance at September 30, 2023223,231 $2,232 $6,491,642 $5,523,245 $(24,743)42,192$(2,167,694)$790,585 $10,615,267 

See accompanying notes.


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HF SINCLAIR CORPORATION
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(In thousands, except per share data)


Nine Months Ended September 30, 2024
Common Stock Additional CapitalRetained EarningsAccumulated Other Comprehensive LossTreasury StockNon-controlling InterestTotal
Equity
SharesAmountSharesAmount
Balance at December 31, 2023223,231$2,232 $5,993,661 $5,379,182 $(11,784)23,236$(1,194,201)$68,208 $10,237,298 
Net income———390,508 ———5,513 396,021 
Dividends ($1.50 declared per common share)
———(290,538)————(290,538)
Other comprehensive loss, net of tax————(7,512)———(7,512)
Issuance of common shares under incentive compensation plans——(8,263)——(161)8,263—— 
Equity-based compensation——15,835—————15,835 
Purchase of treasury stock, inclusive of excise tax—————12,005(673,700)—(673,700)
Distributions to noncontrolling interest holders———————(6,994)(6,994)
Balance at September 30, 2024223,231$2,232 $6,001,233 $5,479,152 $(19,296)35,080$(1,859,638)$66,727 $9,670,410 


Nine Months Ended September 30, 2023
Common Stock Additional CapitalRetained EarningsAccumulated Other Comprehensive LossTreasury StockNon-controlling InterestTotal
Equity
SharesAmountSharesAmount
Balance at December 31, 2022223,231$2,232 $6,468,775 $4,130,252 $(22,013)26,152$(1,335,431)$773,757 $10,017,572 
Net income———1,651,849———92,7021,744,551 
Dividends ($1.35 declared per common share)
———(258,856)————(258,856)
Other comprehensive loss, net of tax————(2,730)———(2,730)
Issuance of common shares under incentive compensation plans——(2,413)——(47)2,413—— 
Equity-based compensation——25,280————1,08826,368 
Purchase of treasury stock, inclusive of excise tax—————16,087(834,676)—(834,676)
Distributions to noncontrolling interest holders———————(76,961)(76,961)
Purchase of HEP units for equity grants— — — — — — — (1)(1)
Balance at September 30, 2023223,231$2,232 $6,491,642 $5,523,245 $(24,743)42,192$(2,167,694)$790,585 $10,615,267 

See accompanying notes.
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HF SINCLAIR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1:Description of Business and Presentation of Financial Statements

Description of Business
References herein to HF Sinclair, “we,” “our,” “ours,” and “us” refer only to HF Sinclair and its consolidated subsidiaries or to HF Sinclair or an individual subsidiary and not to any other person, with certain exceptions. References herein to Holly Energy Partners, L.P. (“HEP”) with respect to time periods prior to the closing of the HEP Merger Transaction (as defined below) on December 1, 2023 refer to HEP and its consolidated subsidiaries.

We are an independent energy company that produces and markets high-value light products such as gasoline, diesel fuel, jet fuel, renewable diesel and lubricants and specialty products. We own and operate refineries located in Kansas, Oklahoma, New Mexico, Wyoming, Washington and Utah. We provide petroleum product and crude oil transportation, terminalling, storage and throughput services to our refineries and the petroleum industry. We market our refined products principally in the Southwest United States, the Rocky Mountains extending into the Pacific Northwest and in other neighboring Plains states and we supply high-quality fuels to more than 1,500 branded stations and license the use of the Sinclair brand at more than 300 additional locations throughout the country. We produce renewable diesel at two of our facilities in Wyoming and our facility in New Mexico. In addition, our subsidiaries produce and market base oils and other specialized lubricants in the United States, Canada and the Netherlands, and export products to more than 80 countries.

Basis of Presentation
The interim consolidated financial statements are unaudited. In management’s opinion, these consolidated financial statements include all normal recurring adjustments necessary for a fair presentation of our consolidated financial position as of September 30, 2024, the consolidated statements of operations, comprehensive income and equity for the three and nine months ended September 30, 2024 and 2023, and consolidated statements of cash flows for the nine months ended September 30, 2024 and 2023 have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Although certain notes and other information required by generally accepted accounting principles in the United States (“GAAP”) have been omitted, we believe that the disclosures in these consolidated financial statements are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2023, which were recast to reflect changes in our reportable segments as described in Note 16 hereto, and are included in Exhibit 99.1 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 filed on May 8, 2024.

HEP Merger
On December 1, 2023, pursuant to the Agreement and Plan of Merger, dated as of August 15, 2023 (the “Merger Agreement”), by and among HEP, HF Sinclair, Navajo Pipeline Co., L.P., a Delaware limited partnership and an indirect wholly owned subsidiary of HF Sinclair (“HoldCo”), Holly Apple Holdings LLC, a Delaware limited liability company and a wholly owned subsidiary of HoldCo (“Merger Sub”), HEP Logistics Holdings, L.P., a Delaware limited partnership and the general partner of HEP (“HLH”), and Holly Logistic Services, L.L.C., a Delaware limited liability company and the general partner of HLH (the “General Partner”), Merger Sub merged with and into HEP, with HEP surviving as an indirect, wholly owned subsidiary of HF Sinclair (the “HEP Merger Transaction”).

Under the terms of the Merger Agreement, each outstanding common unit representing a limited partner interest in HEP (an “HEP common unit”), other than the HEP common units already owned by HF Sinclair and its subsidiaries, was converted into the right to receive 0.315 shares of HF Sinclair common stock and $4.00 in cash, without interest. The Merger Agreement consideration totaled $267.6 million in cash and resulted in the issuance of 21,072,326 shares of HF Sinclair common stock from treasury stock.

The HEP Merger Transaction was accounted for in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 810, “Consolidation.” Since we controlled HEP both before and after the HEP Merger Transaction, the changes in our ownership interest in HEP resulting from the HEP Merger Transaction were accounted for as an equity transaction, and no gain or loss was recognized in our consolidated statements of operations. The tax effects of the HEP Merger Transaction were recorded as adjustments to Deferred income taxes and Additional capital consistent with ASC 740, “Income Taxes.”

For a description of our existing indebtedness, as well as associated changes in connection with the HEP Merger Transaction, see Note 11.
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HF SINCLAIR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Accounting Pronouncements - Not Yet Adopted
In November 2023, Accounting Standards Update (“ASU”) 2023-07, “Improvements to Reportable Segment Disclosures” was issued. ASU 2023-07 requires, among other updates, enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker, as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss. This aims to provide more decision-useful information to stakeholders by giving a clearer picture of the costs incurred by each reportable segment. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective adoption. Early adoption is permitted. The adoption of ASU 2023-07 will not affect our financial position or our results of operations, but will result in additional disclosures for annual periods beginning with our fiscal year ending December 31, 2024 and for interim periods thereafter.

In December 2023, ASU 2023-09, “Improvements to Income Tax Disclosures” was issued. ASU 2023-09 requires enhanced annual disclosures regarding the rate reconciliation and income taxes paid by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, and may be adopted on a prospective or retrospective basis. Early adoption is permitted. We expect to adopt this ASU for the fiscal year beginning January 1, 2025. The adoption will not affect our financial position or our results of operations, but will result in additional disclosures.


NOTE 2:Cushing Connect Joint Venture

In 2019, HEP Cushing LLC (“HEP Cushing”), then a wholly owned subsidiary of HEP and now a wholly owned subsidiary of HF Sinclair, and Plains Marketing, L.P., a wholly owned subsidiary of Plains All American Pipeline, L.P. (“Plains”), formed a 50/50 joint venture, Cushing Connect Pipeline & Terminal LLC (“Cushing Connect”), for (i) the development, construction, ownership and operation of a new 160,000 barrel per day common carrier crude oil pipeline (the “Cushing Connect Pipeline”) that connects the Cushing, Oklahoma crude oil hub to our Tulsa refineries and (ii) the ownership and operation of 1.5 million barrels of crude oil storage in Cushing, Oklahoma (the “Cushing Connect Terminal”). Cushing Connect entered into a contract with an affiliate of HEP, now a subsidiary of HF Sinclair, to manage the operation of the Cushing Connect Pipeline and with an affiliate of Plains to manage the operation of the Cushing Connect Terminal. The total investment in Cushing Connect was generally shared proportionately among the partners. However, HEP was solely responsible for any Cushing Connect Pipeline construction costs that exceeded the budget by more than 10%.

Cushing Connect and its two subsidiaries (the “Cushing Connect Entities”), are variable interest entities (“VIE”) as defined under GAAP. A VIE is a legal entity whose equity owners do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or, as a group, the equity holders lack the power, through voting rights, to direct the activities that most significantly impact the entity’s financial performance, the obligation to absorb the entity’s expected losses or rights to expected residual returns. The Cushing Connect Entities are VIEs because they did not originally have sufficient equity at risk to finance their activities without additional financial support. We are the primary beneficiary of two of these entities as HEP constructed and operates the Cushing Connect Pipeline, and we have more ability to direct the activities that most significantly impact the financial performance of Cushing Connect and the Cushing Connect Pipeline. Therefore, we consolidate Cushing Connect and the related Cushing Connect Pipeline subsidiary. We are not the primary beneficiary of the Cushing Connect Terminal, which we account for using the equity method of accounting. Our maximum exposure to loss as a result of our involvement with Cushing Connect Terminal is not expected to be material due to the long-term terminalling agreements in place to support operations.

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HF SINCLAIR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
With the exception of the assets of HEP Cushing, creditors of the Cushing Connect Entities have no recourse to our assets. Any recourse to HEP Cushing would be limited to the extent of HEP Cushing’s assets, which other than its investment in Cushing Connect, are not significant. Furthermore, our creditors have no recourse to the assets of the Cushing Connect Entities. The most significant assets of Cushing Connect and the Cushing Connect Pipeline that are available to settle only their obligations, along with their most significant liabilities for which their creditors do not have recourse to our general credit, were:

September 30, 2024December 31, 2023
(In thousands)
Cash and cash equivalents$1,919 $1,536 
Properties, plants and equipment, at cost$102,977 $102,936 
Less: accumulated depreciation$(10,681)$(8,022)
Intangibles and other$29,842 $32,473 


NOTE 3:Revenues

Substantially all revenue-generating activities relate to sales of refined products, branded fuel, lubricants and specialty products, renewable diesel and excess crude oil inventories that are sold at market prices (variable consideration) under contracts with customers. Additionally, we have revenues attributable to our logistics services provided under petroleum product and crude oil pipeline transportation, processing, storage and terminalling agreements with third parties.

Disaggregated revenues were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
(In thousands)
Revenues by type:
Refined product revenues
Transportation fuels (1)
$4,480,825 $5,737,557 $14,114,991 $14,970,620 
Lubricants and specialty products (2)
609,772 612,817 1,868,156 1,928,054 
Asphalt, fuel oil and other products (3)
540,179 576,274 1,592,455 1,589,133 
Total refined product revenues5,630,776 6,926,648 17,575,602 18,487,807 
Excess crude oil revenues (4)
360,347 440,851 1,064,239 1,773,498 
Renewable diesel revenues (5)
194,110 213,144 563,916 590,620 
Transportation and logistics services27,753 29,073 77,946 85,322 
Marketing revenues (6)
950,050 1,259,205 2,668,219 3,237,523 
Other revenues (7)
44,104 36,550 130,194 129,489 
Total sales and other revenues$7,207,140 $8,905,471 $22,080,116 $24,304,259 

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HF SINCLAIR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
(In thousands)
Refined product revenues by market:
United States:
Mid-Continent$2,201,377 $2,598,477 $6,827,071 $6,882,470 
Southwest931,098 1,117,275 2,989,695 2,840,563 
Rocky Mountains1,959,195 2,653,603 6,103,557 7,059,200 
Northeast209,394 236,010 641,463 733,609 
Canada266,653 261,841 810,701 767,517 
Europe, Asia and Latin America63,059 59,442 203,115 204,448 
Total refined product revenues$5,630,776 $6,926,648 $17,575,602 $18,487,807 
(1)Transportation fuels revenues are attributable to our Refining segment’s wholesale marketing of gasoline, diesel and jet fuel.
(2)Lubricants and specialty products consist of base oil, waxes, finished lubricants and other specialty fluids.
(3)Revenues from asphalt, fuel oil and other products include amounts attributable to our Refining and Lubricants & Specialties segments of $471.6 million and $68.5 million, respectively, for the three months ended September 30, 2024, $1,381.8 million and $210.7 million, respectively, for the nine months ended September 30, 2024, $504.3 million and $72.0 million, respectively, for the three months ended September 30, 2023, and $1,413.3 and $175.8 million, respectively, for the nine months ended September 30, 2023.
(4)Excess crude oil revenues represent sales of purchased crude oil inventory that at times exceeds the supply needs of our refineries.
(5)Renewable diesel revenues are principally attributable to our Renewables segment.
(6)Marketing revenues consist primarily of branded gasoline and diesel fuel.
(7)Other revenues are principally attributable to our Refining segment.

Our consolidated balance sheets reflect contract liabilities related to unearned revenues attributable to future service obligations under our third-party transportation agreements and production agreements from our Sonneborn operations. The following table presents changes to our contract liabilities:

Nine Months Ended September 30,
20242023
(In thousands)
Balance at January 1$7,533 $10,722 
Increase17,145 15,216 
Recognized as revenue(17,191)(17,925)
Balance at September 30$7,487 $8,013 

As of September 30, 2024, we have long-term contracts with customers that specify minimum volumes of gasoline, diesel and lubricants and specialty products to be sold ratably at market prices through 2034. Future prices are subject to market fluctuations and therefore, we have elected the exemption to exclude variable consideration under these contracts under ASC 606-10-50-14A. Aggregate minimum volumes expected to be sold (future performance obligations) under our long-term product sales contracts with customers are as follows:

Contractual MinimumRemainder of 202420252026ThereafterTotal
(In thousands)
Refined product sales volumes (barrels)8,586 28,272 19,857 49,954 106,669 

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HF SINCLAIR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Additionally, we have long-term contracts with third-party customers that specify minimum volumes of product to be transported through our pipelines and terminals that result in fixed-minimum annual revenues through 2033. Annual minimum revenues attributable to our third-party contracts as of September 30, 2024, are presented below:

Contractual MinimumRemainder of 202420252026ThereafterTotal
(In thousands)
Midstream operations revenues$5,213 $11,242 $7,782 $43,308 $67,545 


NOTE 4:Fair Value Measurements

Fair value measurements are derived using inputs (assumptions that market participants would use in pricing an asset or liability, including assumptions about risk). GAAP categorizes inputs used in fair value measurements into three broad levels as follows:

•(Level 1) Quoted prices in active markets for identical assets or liabilities.
•(Level 2) Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, similar assets and liabilities in markets that are not active or can be corroborated by observable market data.
•(Level 3) Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes valuation techniques that involve significant unobservable inputs.

The carrying amounts of derivative instruments and RINs credit obligations at September 30, 2024 and December 31, 2023 were as follows:
Fair Value by Input Level
Carrying AmountLevel 1Level 2Level 3
(In thousands)
September 30, 2024
Assets:
NYMEX futures contracts$840 $840 $— $— 
Commodity forward contracts72 — 72 — 
Total assets$912 $840 $72 $— 
Liabilities:
Commodity price swaps$674 $— $674 $— 
Commodity forward contracts21 — 21 — 
Foreign currency forward contracts4,270 — 4,270 — 
RINs credit obligations (1)
27,471 — 27,471 — 
Total liabilities$32,436 $— $32,436 $— 

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HF SINCLAIR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Fair Value by Input Level
Carrying AmountLevel 1Level 2Level 3
(In thousands)
December 31, 2023
Assets:
NYMEX futures contracts$836 $836 $— $— 
Commodity forward contracts2,908 — 2,908 — 
Total assets$3,744 $836 $2,908 $— 
Liabilities:
Commodity price swaps$7,808 $— $7,808 $— 
Commodity forward contracts1,848 — 1,848 — 
Foreign currency forward contracts7,893 — 7,893 — 
Total liabilities$17,549 $— $17,549 $— 
(1)Represent obligations for RINs credits for which we did not have sufficient quantities at September 30, 2024 to satisfy our Environmental Protection Agency (“EPA”) regulatory blending requirements.

Level 1 Fair Value Measurements
Our New York Mercantile Exchange (“NYMEX”) futures contracts are exchange-traded and are measured and recorded at fair value using quoted market prices, a Level 1 input.

Level 2 Fair Value Measurements
Derivative instruments consisting of foreign currency forward contracts, commodity price swaps and forward sales and purchase contracts are measured and recorded at fair value using Level 2 inputs. The fair value of the commodity price swap contracts is based on the net present value of expected future cash flows related to both variable and fixed rate legs of the respective swap agreements. The measurements are computed using market-based observable input and quoted forward commodity prices with respect to our commodity price swaps. The fair value of the forward sales and purchase contracts is computed using quoted forward commodity prices. The fair value of foreign currency forward contracts is based on values provided by a third party, which were derived using market quotes for similar type instruments, a Level 2 input. RINs credit obligations are valued based on quoted prices from an independent pricing service.


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HF SINCLAIR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 5:Earnings (Loss) Per Share

Basic earnings (loss) per share is calculated as Net income (loss) attributable to HF Sinclair stockholders, adjusted for participating securities’ share in earnings divided by the average number of shares of common stock outstanding. Diluted earnings (loss) per share includes the incremental shares resulting from certain share-based awards. The following is a reconciliation of the denominators of the basic and diluted per share computations for net income attributable to HF Sinclair stockholders:
 Three Months Ended September 30,Nine Months Ended September 30,
 2024202320242023
 (In thousands, except per share data)
Net income (loss) attributable to HF Sinclair stockholders$(75,944)$790,922 $390,508 $1,651,849 
Participating securities’ share in earnings (1)
526 7,188 2,255 14,340 
Net income (loss) attributable to common shares$(76,470)$783,734 $388,253 $1,637,509 
Average number of shares of common stock outstanding189,840 185,456 193,341 191,047 
Average number of shares of common stock outstanding assuming dilution189,840 185,456 193,341 191,047 
Basic earnings (loss) per share$(0.40)$4.23 $2.01 $8.57 
Diluted earnings (loss) per share$(0.40)$4.23 $2.01 $8.57 
(1)Unvested restricted stock unit awards and unvested performance share units that settle in HF Sinclair common stock represent participating securities because they participate in nonforfeitable dividends or distributions with the common stockholders of HF Sinclair. Participating earnings represent the distributed and undistributed earnings of HF Sinclair attributable to the participating securities. Unvested restricted stock unit awards and performance share units do not participate in undistributed net losses as they are not contractually obligated to do so.


NOTE 6:Stock-Based Compensation

We have a principal share-based compensation plan, the HF Sinclair Corporation Amended and Restated 2020 Long Term Incentive Plan (the “2020 Plan”). The 2020 Plan provides for the grant of unrestricted and restricted stock, restricted stock units, other stock-based awards, stock options, performance awards, substitute awards, cash awards and stock appreciation rights. The restricted stock unit awards generally vest over a period of one to three years. Upon vesting, restrictions on the restricted stock units lapse at which time they convert to common shares or cash. The performance share units generally vest over a period of three years and are payable in stock or cash upon meeting certain financial and performance criteria. The number of shares ultimately issued or cash paid for the performance share units can range from zero to 200% of target award amounts. The holders of unvested restricted stock units and performance share units have the right to receive dividends. We also have a stock compensation deferral plan that allows non-employee directors to defer settlement of vested stock granted under our share-based compensation plan.

The compensation cost for these plans was $4.5 million and $12.8 million for the three months ended September 30, 2024 and 2023, respectively, and $16.1 million and $27.4 million for the nine months ended September 30, 2024 and 2023, respectively.

Additionally, prior to the HEP Merger Transaction, HEP maintained an equity-based compensation plan for the General Partner’s non-employee directors and certain executives and employees. Compensation costs attributable to HEP’s equity-based compensation plan were $0.4 million and $1.1 million for the three and nine months ended September 30, 2023, respectively.

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HF SINCLAIR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A summary of restricted stock units and performance share units activity during the nine months ended September 30, 2024, is presented below:
Restricted Stock UnitsPerformance Share Units
Outstanding at January 1, 20241,102,755 485,531 
Granted (1)
21,421 3,093 
Vested(158,927)(1,859)
Forfeited(227,804)(80,074)
Outstanding at September 30, 2024737,445 406,691 
(1) Weighted average grant date fair value per unit.$49.19 $51.22 


NOTE 7:Inventories

Inventories consist of the following components:
September 30, 2024December 31, 2023
(In thousands)
Crude oil$763,486 $858,411 
Other raw materials and unfinished products (1)
699,643 683,066 
Finished products (2)
1,260,686 1,435,817 
Lower of cost or market reserve(311,384)(331,570)
Crude oil and refined products2,412,431 2,645,724 
Process chemicals (3)
44,701 50,917 
Repair and maintenance supplies and other (4)
230,548 225,190 
Materials, supplies and other275,249 276,107 
Total inventories$2,687,680 $2,921,831 
(1)Other raw materials and unfinished products include feedstocks and blendstocks, other than crude.
(2)Finished products include gasolines, jet fuels, diesels, renewable diesels, lubricants, asphalts, LPG’s and residual fuels.
(3)Process chemicals include additives and other chemicals.
(4)Includes RINs.

Our Refining segment inventories that are valued at the lower of last-in, first out (“LIFO”) cost or market reflect a valuation reserve of $198.8 million and $220.6 million at September 30, 2024 and December 31, 2023, respectively. A new market reserve of $198.8 million as of September 30, 2024 was based on market conditions and prices at that time. The effect of the change in the lower of cost or market reserve was an increase to Cost of sales totaling $198.8 million for the three months ended September 30, 2024 and a decrease of $21.8 million for the nine months ended September 30, 2024. The June 30, 2023 market reserve of $26.8 million reversed resulting in a decrease to Cost of sales totaling $26.8 million for the three months ended September 30, 2023.

Our Renewables segment inventories that are valued at the lower of LIFO cost or market reflect a valuation reserve of $112.6 million and $111.0 million at September 30, 2024 and December 31, 2023, respectively. A new market reserve of $112.6 million as of September 30, 2024 was based on market conditions and prices at that time. The effect of the change in the lower of cost or market reserve was an increase to Cost of sales totaling $3.5 million for the three months ended September 30, 2024 and a decrease to Cost of sales totaling $17.0 million for the three months ended September 30, 2023. The effect of the change in the lower of cost or market reserve was an increase to Cost of sales totaling $1.6 million for the nine months ended September 30, 2024 and a decrease to Cost of sales totaling $4.1 million for the nine months ended September 30, 2023.


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HF SINCLAIR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 8:Accrued Liabilities and Other Long-Term Liabilities

Accrued liabilities consist of the following:

September 30, 2024December 31, 2023
(In thousands)
Accrued interest expense$56,370 $38,251 
Accrued taxes other than income45,916 29,172 
Derivatives4,965 17,549 
Environmental liabilities27,216 34,002 
Precious metal financing34,872 37,009 
Right-of-use (“ROU”) financing lease liabilities
10,767 10,842 
Wage and other employee-related liabilities154,634 84,565 
Environmental credit obligations41,567 6,400 
Other122,411 195,255 
Total accrued liabilities$498,718 $453,045 

Other long-term liabilities consist of the following:
September 30, 2024December 31, 2023
(In thousands)
Environmental liabilities$160,169 $161,375 
ROU financing lease liabilities71,343 74,860 
Other186,665 182,491 
Total other long-term liabilities$418,177 $418,726 


NOTE 9:Environmental

Environmental costs are charged to Operating expenses if they relate to an existing condition caused by past operations and do not contribute to current or future revenue generation. We have ongoing investigations of environmental matters at various locations and routinely assess our recorded environmental obligations, if any, with respect to such matters. Liabilities are recorded when site restoration, environmental remediation, cleanup and other obligations are known or considered probable and can be reasonably estimated. Such estimates are undiscounted and require judgment with respect to costs, time frame and extent of required remedial and cleanup activities and are subject to periodic adjustments based on currently available information. Recoveries of environmental costs through insurance, indemnification arrangements or other sources are included in Other assets to the extent such recoveries are considered probable.

We incurred expenses of $3.2 million and $1.6 million for the three months ended September 30, 2024 and 2023, respectively, and $5.6 million and $17.1 million for the nine months ended September 30, 2024 and 2023, respectively, for environmental remediation obligations. The accrued environmental liability reflected on our consolidated balance sheets was $187.4 million and $195.4 million at September 30, 2024 and December 31, 2023, respectively, of which $160.2 million and $161.4 million, respectively, were classified as Other long-term liabilities. These accruals include remediation and monitoring costs expected to be incurred over an extended period of time. Estimated liabilities could increase in the future when the results of ongoing investigations become known, are considered probable and can be reasonably estimated.


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HF SINCLAIR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 10:Taxes

For the nine months ended September 30, 2024, we recorded income tax expense of $52.2 million compared to $480.6 million for the nine months ended September 30, 2023. This decrease was principally due to lower pre-tax income during the nine months ended September 30, 2024, compared to the same period of 2023. Our effective tax rates were 11.6% and 21.6% for the nine months ended September 30, 2024 and 2023, respectively. The difference between the U.S. federal statutory rate and the effective tax rate for the nine months ended September 30, 2024 is primarily due to the relationship between pre-tax results and non-taxable permanent differences. The difference in the U.S. federal statutory rate and the effective tax rate for the nine months ended September 30, 2023 was primarily due to the impact of federal tax credits and the relationship between pre-tax results and the earnings attributable to the noncontrolling interest that is not included in income for tax purposes.


NOTE 11:Debt

HF Sinclair and HEP Credit Agreements
We have a $1.65 billion senior unsecured revolving credit facility maturing in April 2026 (the “HF Sinclair Credit Agreement”). The HF Sinclair Credit Agreement may be used for revolving credit loans and letters of credit from time to time and is available to fund general corporate purposes. At September 30, 2024, we were in compliance with all covenants, had no outstanding borrowings and had outstanding letters of credit totaling $0.2 million under the HF Sinclair Credit Agreement.

Additionally, our wholly owned subsidiary, HEP, has a $1.2 billion senior secured revolving credit facility maturing in July 2025 (the “HEP Credit Agreement” and, together with the HF Sinclair Credit Agreement, the “Credit Agreements”). In connection with the consummation of the HEP Merger Transaction, we amended the HEP Credit Agreement to, among other things, (a) provide a guaranty from us and terminate all guaranties from subsidiaries of HEP, (b) amend the definition of “Investment Grade Rating” (as defined in the HEP Credit Agreement) to reference the credit rating of our senior unsecured indebtedness, (c) eliminate the requirement to deliver separate audited and unaudited financial statements for HEP and its subsidiaries and only provide certain segment-level reporting for HEP with any compliance certificate delivered in accordance with the HEP Credit Agreement and (d) amend certain covenants to eliminate certain restrictions on (i) amendments to intercompany contracts, (ii) transactions with us and our subsidiaries and (iii) investments in and contributions, dividends, transfers and distributions to us and our subsidiaries.

The HEP Credit Agreement is available to fund capital expenditures, investments, acquisitions, distribution payments, working capital and for general corporate purposes. It is also available to fund letters of credit up to a $50 million sub-limit and has an accordion feature that allows us to increase the commitments under the HEP Credit Agreement up to a maximum amount of $1.7 billion. At September 30, 2024, we were in compliance with all of its covenants, had outstanding borrowings of $350.0 million and no outstanding letters of credit under the HEP Credit Agreement.

Indebtedness under the Credit Agreements bears interest, at our option, for borrowings in U.S. dollars at either (a) a base rate equal to the sum of (1) the highest of (i) the prime rate (as publicly announced from time to time by the applicable administrative agent), (ii) the Federal Funds Effective Rate (as defined in the HF Sinclair Credit Agreement and as defined as the “Federal Funds Rate” in the HEP Credit Agreement) plus 0.5%, and (iii) Spread Adjusted Term SOFR (as defined in the HF Sinclair Credit Agreement and as defined as “Adjusted Term SOFR” in the HEP Credit Agreement) for a one-month interest period plus 1%, plus (2) an applicable margin for base rate loans ranging from 0.25% to 1.125%, or (b) the sum of (1) Spread Adjusted Term SOFR (as defined in the HF Sinclair Credit Agreement and as defined as “Adjusted Term SOFR” in the HEP Credit Agreement) for the applicable interest period, plus (2) an applicable margin for term SOFR loans ranging from 1.25% to 2.125%. The HF Sinclair Credit Agreement allows for borrowings in Sterling and Euros with similar interest rates. In each case and each Credit Agreement, the applicable margin is based on HF Sinclair’s debt rating assigned by Standard & Poor’s Rating Services and Moody’s Investors Service, Inc. The weighted average interest rate in effect under the HEP Credit Agreement on our borrowings was 6.58% as of September 30, 2024.

During the nine months ended September 30, 2024, we had net repayments of $105.5 million under the HEP Credit Agreement.

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HF SINCLAIR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Restricted HF Sinclair Senior Notes Exchange
On December 4, 2023, we completed our offers to exchange any and all outstanding HEP 5.000% senior notes maturing February 2028 (the “HEP 5.000% Senior Notes”) and HEP 6.375% senior notes maturing April 2027 (the “HEP 6.375% Senior Notes” and, together with the HEP 5.000% Senior Notes, the “HEP Senior Notes”) for HF Sinclair 5.000% senior notes maturing February 2028 (the “HF Sinclair 5.000% Senior Notes”) and HF Sinclair 6.375% senior notes maturing April 2027 (the “HF Sinclair 6.375% Senior Notes” and, together with the HF Sinclair 5.000% Senior Notes, the “Restricted HF Sinclair Senior Notes”) to be issued by HF Sinclair with registration rights and cash. In connection with the exchange offers, we amended the indenture governing the HEP Senior Notes to eliminate (i) substantially all of the restrictive covenants, (ii) certain of the events which may lead to an “Event of Default,” (iii) the SEC reporting covenant and (iv) the requirement of HEP to offer to purchase the HEP Senior Notes upon a change of control. The Restricted HF Sinclair Senior Notes were issued in exchange for the HEP Senior Notes pursuant to a private exchange offer exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). This exchange was part of a broader corporate strategy, including the HEP Merger Transaction.

On May 10, 2024, HF Sinclair filed a registration statement, as amended, which was declared effective on August 5, 2024, to exchange the Restricted HF Sinclair Senior Notes for an equal principal amount of each respective series of the Restricted HF Sinclair Senior Notes (such notes offered in exchange, the “Registered HF Sinclair Senior Notes”). The Registered HF Sinclair Senior Notes are substantially identical to the Restricted HF Sinclair Senior Notes in all material respects except the Registered HF Sinclair Senior Notes are registered under the Securities Act and are not subject to restrictions on transfer or to any increase in annual interest rate for failure to comply with the Registration Rights Agreement, dated December 4, 2023, and do not have the registration rights applicable to the Restricted HF Sinclair Senior Notes. On September 5, 2024, HF Sinclair completed its offers to exchange the Restricted HF Sinclair Senior Notes for the Registered HF Sinclair Senior Notes.

The Registered HF Sinclair Senior Notes are unsecured and unsubordinated obligations of ours and rank equally with all our other existing and future unsecured and unsubordinated indebtedness. Each series of the Registered HF Sinclair Senior Notes has the same interest rate, interest payment dates, maturity date and redemption terms as the corresponding series of Restricted HF Sinclair Senior Notes.

Senior Notes
Our unsecured senior notes and unsubordinated obligations (as set forth in the table below under “HF Sinclair Financing Arrangements”) rank equally with all future unsecured and unsubordinated indebtedness.

Further, we may from time to time seek to retire some or all of our outstanding debt agreements through cash purchases, and/or exchanges, open market purchases, privately negotiated transactions, tender offers or otherwise. Such transactions, if any, may be material and will depend on prevailing market conditions, our liquidity requirements and other factors.

HF Sinclair Financing Arrangements
Certain of our wholly owned subsidiaries entered into financing arrangements whereby such subsidiaries sold a portion of their precious metals catalyst to a financial institution in exchange for cash and then financed the use of the precious metals catalyst for a term not to exceed one year. The volume of the precious metals catalyst and the interest rate are fixed over the term of each agreement, and the payments are recorded as Interest expense. Upon maturity of the financing arrangement, we must either satisfy the obligation at fair market value or refinance to extend the maturity. These financing arrangements are recorded at a Level 2 fair value totaling $34.4 million and $37.0 million at September 30, 2024 and December 31, 2023, respectively, and are included in Accrued liabilities on our consolidated balance sheets. See Note 4 for additional information on Level 2 inputs.

HF Sinclair may, from time to time, issue letters of credit pursuant to uncommitted letters of credit facilities with its lenders. At September 30, 2024, there were no letters of credit outstanding under such credit facilities.


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HF SINCLAIR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The principal and carrying amounts of Long-term debt are as follows:
Carrying Amount (1)
Maturity DateSeptember 30, 2024December 31, 2023
HollyFrontier Corporation Senior Notes:
5.875% Senior Notes
April 2026$202,900 $202,900 
4.500% Senior Notes
October 203074,966 74,966 
277,866 277,866 
HF Sinclair Senior Notes:
5.875% Senior Notes
April 2026797,100 797,100 
6.375% Senior Notes
April 2027399,875 399,875 
5.000% Senior Notes
February 2028498,879 498,879 
4.500% Senior Notes
October 2030325,034 325,034 
2,020,888 2,020,888 
HEP Senior Notes:
6.375% Senior Notes
April 2027125 125 
5.000% Senior Notes
February 20281,121 1,121 
1,246 1,246 
Total Senior Notes2,300,000 2,300,000 
HEP Credit AgreementJuly 2025350,000 455,500 
HF Sinclair Credit AgreementApril 2026— — 
Total Credit Agreements350,000 455,500 
Less current debt (2)
(350,000)— 
Unamortized discount and debt issuance costs(13,195)(16,417)
Total long-term debt, net$2,286,805 $2,739,083 
(1)As of September 30, 2024 and December 31, 2023, the carrying amounts of our Senior Notes equaled the principal amounts.
(2)The HEP Credit Agreement matures in July 2025 and is classified as Current debt on our consolidated balance sheets as of September 30, 2024.

The fair values of the senior notes are as follows:
September 30, 2024December 31, 2023
(In thousands)
HollyFrontier Corporation, HF Sinclair and HEP Senior Notes$2,310,949 $2,271,856 

These fair values are based on a Level 2 input. See Note 4 for additional information on Level 2 inputs.

We capitalized $1.2 million and $1.1 million for the three months ended September 30, 2024 and 2023, respectively, and $2.7 million and $3.5 million for the nine months ended September 30, 2024 and 2023, respectively, of interest attributable to construction projects.


NOTE 12:Derivative Instruments and Hedging Activities

Commodity Price Risk Management
Our primary market risk is commodity price risk. We are exposed to market risks related to the volatility in the price of crude oil and refined products, as well as volatility in the price of natural gas used in our refining operations. We periodically enter into derivative contracts in the form of commodity price swaps, collar contracts, forward contracts and futures contracts to mitigate price exposure with respect to our inventory positions, natural gas purchases, sales prices of refined products and crude oil costs.

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HF SINCLAIR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Foreign Currency Risk Management
We are exposed to market risk related to the volatility in foreign currency exchange rates. We periodically enter into derivative contracts in the form of foreign exchange forward contracts to mitigate the exposure associated with fluctuations on intercompany notes with our foreign subsidiaries that are not denominated in the U.S. dollar.

Accounting Hedges
We periodically have swap contracts to lock in basis spread differentials on forecasted purchases of crude oil and forward sales contracts that lock in the prices of future sales of crude oil and refined product. These contracts have been designated as accounting hedges and are measured at fair value with offsetting adjustments (gains/losses) recorded directly to other comprehensive income (“OCI”). These fair value adjustments are later reclassified to earnings as the hedging instruments mature.

The following tables present the pre-tax effect on OCI and earnings due to fair value adjustments and maturities of hedging instruments under hedge accounting:
Net Unrealized Gain
Recognized in OCI		Loss Reclassified
into Earnings
Derivatives Designated as Cash Flow Hedging InstrumentsThree Months Ended September 30,Statement of Operations LocationThree Months Ended September 30,
2024202320242023
(In thousands)(In thousands)
Commodity contracts$456 $— Sales and other revenues$(518)$(3,506)
Total$456 $— $(518)$(3,506)

Net Unrealized Loss
Recognized in OCI		Loss Reclassified
into Earnings
Derivatives Designated as Cash Flow Hedging InstrumentsNine Months Ended September 30,Statement of Operations LocationNine Months Ended September 30,
2024202320242023
(In thousands)(In thousands)
Commodity contracts$— $— Sales and other revenues$(5,110)$(3,236)
Total$— $— $(5,110)$(3,236)

Economic Hedges
We have commodity contracts, including NYMEX futures contracts, to lock in prices on forecasted inventory purchases and sales. We have basis swap contracts to mitigate exposure to natural gas price volatility. We periodically have forward purchase and sale contracts to lock in basis spread differentials on forecasted crude oil and refined products purchases. We periodically use collar contracts to mitigate exposure to natural gas price volatility; these contracts serve as economic hedges (derivatives used for risk management but not designated as accounting hedges). We also have forward currency contracts to fix the rate of foreign currency. In addition, our precious metals catalyst financing arrangements discussed in Note 11 could require repayment under certain conditions based on the future pricing of platinum, which is an embedded derivative. These contracts are measured at fair value with offsetting adjustments (gains/losses) recorded directly to earnings.

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HF SINCLAIR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table presents the pre-tax effect on income due to maturities and fair value adjustments of our economic hedges:
Gain (Loss) Recognized in Earnings
Derivatives Not Designated as Hedging InstrumentsStatement of Operations LocationThree Months Ended September 30,Nine Months Ended September 30,
2024202320242023
(In thousands)
Commodity contractsCost of materials and other$14,978 $(29,041)$(4,149)$(9,139)
Operating expenses(1,059)3,304 (2,937)(7,106)
Interest expense1,201 133 (29)5,053 
Foreign currency contractsGain on foreign currency transactions(4,145)10,185 9,526 1,583 
Total$10,975 $(15,419)$2,411 $(9,609)

As of September 30, 2024, we have the following notional contract volumes related to outstanding derivative instruments:
Notional Contract Volumes
by Year of Maturity
Total Outstanding Notional20242025Unit of Measure
Derivatives Not Designated as Hedging Instruments:
NYMEX futures (WTI) - short1,400,0001,400,000—Barrels
Forward gasoline and diesel contracts - long60,00060,000—Barrels
Foreign currency forward contracts383,114,375102,186,063280,928,312U.S. dollar
Forward commodity contracts (platinum)34,6282,04732,581Troy ounces
Natural gas price swaps (basis spread) - long1,104,0001,104,000—MMBTU

The following tables present the fair value and the locations of our outstanding derivative instruments in the consolidated balance sheets. These amounts are presented on a gross basis with offsetting balances that reconcile to a net asset or liability position in our consolidated balance sheets. We present on a net basis to reflect the net settlement of these positions in accordance with provisions of our master netting arrangements.

Derivatives in Net Asset PositionDerivatives in Net Liability Position
Gross AssetsGross Liabilities Offset in Balance SheetNet Assets Recognized in Balance SheetGross LiabilitiesGross Assets Offset in Balance SheetNet Liabilities Recognized in Balance Sheet
 (In thousands)
September 30, 2024
Derivatives not designated as cash flow hedging instruments:
NYMEX futures contracts
$840 $— $840 $— $— $— 
Commodity price swap contracts
— — — 674 — 674 
Commodity forward contracts
72 — 72 21 — 21 
Foreign currency forward contracts
— — — 4,950 (680)4,270 
$912 $— $912 $5,645 $(680)$4,965 
Total net balance$912 $4,965 
Balance sheet classification:Prepayments and other$912 Accrued liabilities$4,965 

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HF SINCLAIR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Derivatives in Net Asset PositionDerivatives in Net Liability Position
Gross AssetsGross Liabilities Offset in Balance SheetNet Assets Recognized in Balance SheetGross LiabilitiesGross Assets Offset in Balance SheetNet Liabilities Recognized in Balance Sheet
 (In thousands)
December 31, 2023
Derivatives not designated as cash flow hedging instruments:
NYMEX futures contracts
$836 $— $836 $— $— $— 
Commodity price swap contracts
— — — 7,808 — 7,808 
Commodity forward contracts
2,908 — 2,908 1,848 — 1,848 
Foreign currency forward contracts
— — — 7,893 — 7,893 
$3,744 $— $3,744 $17,549 $— $17,549 
Total net balance$3,744 $17,549 
Balance sheet classification:Prepayments and other$3,744 Accrued liabilities$17,549 


NOTE 13:Stockholders’ Equity

On May 7, 2024, our Board of Directors approved a new $1.0 billion share repurchase program (the “May 2024 Share Repurchase Program”), which replaced all existing share repurchase programs, including the approximately $214.2 million remaining under the share repurchase program approved by our Board of Directors in August 2023. The May 2024 Share Repurchase Program authorizes us to repurchase common stock in the open market or through privately negotiated transactions. Privately negotiated repurchases from REH are also authorized under the May 2024 Share Repurchase Program, subject to REH’s interest in selling its shares and other limitations. The timing and amount of share repurchases, including those from REH, will depend on market conditions and corporate, tax, regulatory and other relevant considerations. In addition, we are authorized by our Board of Directors to repurchase shares in an amount sufficient to offset shares issued under our compensation programs. The May 2024 Share Repurchase Program may be discontinued at any time by our Board of Directors.

The following table presents the total open market and privately negotiated purchases of shares under our share repurchase programs for the three and nine months ended September 30, 2024 and 2023:

 Three Months Ended September 30,Nine Months Ended September 30,
 2024202320242023
 
(In thousands, except share data)
Number of shares repurchased (1)
2,665,00011,274,91711,944,17716,068,774
Cash paid for shares repurchased
$126,456 $585,574 $663,684 $825,897 
(1)During the nine months ended September 30, 2024, 7,864,761 shares were repurchased for $456.1 million, pursuant to privately negotiated repurchases from REH Company. No such privately negotiated repurchases were made during the three months ended September 30, 2024. During the three and nine months ended September 30, 2023, 11,274,917 and 13,244,196 shares were repurchased for $585.6 million and $685.6 million, respectively, pursuant to privately negotiated repurchases from REH Company.

As of September 30, 2024, we had remaining authorization to repurchase up to $798.5 million under the May 2024 Share Repurchase Program.

During the nine months ended September 30, 2024 and 2023, we withheld 60,116 and 18,648 shares, respectively, of our common stock under the terms of stock-based compensation agreements to provide funds for the payment of payroll and income taxes due at the vesting of share-based awards.

On October 31, 2024, our Board of Directors announced that it declared a regular quarterly dividend in the amount of $0.50 per share, payable on December 4, 2024 to holders of record of common stock on November 21, 2024.
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HF SINCLAIR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


NOTE 14:Other Comprehensive Income (Loss)

The components and allocated tax effects of other comprehensive income (loss) are as follows:
Before-TaxTax Expense
(Benefit)		After-Tax
 (In thousands)
Three Months Ended September 30, 2024
Net change in foreign currency translation adjustment$10,188 $2,136 $8,052 
Net unrealized gain on hedging instruments456 110 346 
Net change in pension and other post-retirement benefit obligations(490)(109)(381)
Other comprehensive income attributable to HF Sinclair stockholders
$10,154 $2,137 $8,017 
Three Months Ended September 30, 2023
Net change in foreign currency translation adjustment$(13,471)$(2,834)$(10,637)
Net change in pension and other post-retirement benefit obligations(960)(233)(727)
Other comprehensive loss attributable to HF Sinclair stockholders$(14,431)$(3,067)$(11,364)

Before-TaxTax BenefitAfter-Tax
(In thousands)
Nine Months Ended September 30, 2024
Net change in foreign currency translation adjustment$(7,659)$(1,608)$(6,051)
Net change in pension and other post-retirement benefit obligations(1,905)(444)(1,461)
Other comprehensive loss attributable to HF Sinclair stockholders$(9,564)$(2,052)$(7,512)
Nine Months Ended September 30, 2023
Net change in foreign currency translation adjustment$(693)$(144)$(549)
Net change in pension and other post-retirement benefit obligations(2,880)(699)(2,181)
Other comprehensive loss attributable to HF Sinclair stockholders$(3,573)$(843)$(2,730)

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HF SINCLAIR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table presents the line item effects for reclassifications out of accumulated other comprehensive income (“AOCI”) and into the consolidated statements of operations:
Three Months Ended September 30,
AOCI Component20242023Statement of Operations Line Item
(In thousands)
Hedging instruments:
Commodity price swaps$(518)$(3,506)Sales and other revenues
(125)(850)Income tax benefit
(393)(2,656)Net of tax
Other post-retirement benefit obligations:
Pension obligations(437)45 Gain (loss) on sale of assets and other
(116)11 Income tax expense (benefit)
(321)34 Net of tax
Post-retirement healthcare obligations933 918 Gain on sale of assets and other
226 223 Income tax expense
707 695 Net of tax
Retirement restoration plan(6)(3)Loss on sale of assets and other
(1)(1)Income tax benefit
(5)(2)Net of tax
Total reclassifications for the period$(12)$(1,929)

Nine Months Ended September 30,
AOCI Component20242023Statement of Operations Line Item
(In thousands)
Hedging instruments:
Commodity price swaps$(5,110)$(3,236)Sales and other revenues
(1,238)(785)Income tax benefit
(3,872)(2,451)Net of tax
Other post-retirement benefit obligations:
Pension obligations(869)135Gain (loss) on sale of assets and other
(230)33Income tax expense (benefit)
(639)102 Net of tax
Post-retirement healthcare obligations2,790 2,754Gain on sale of assets and other
677 668Income tax expense
2,113 2,086 Net of tax
Retirement restoration plan(16)(9)Gain on sale of assets and other
(3)(2)Income tax benefit
(13)(7)Net of tax
Total reclassifications for the period$(2,411)$(270)

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HF SINCLAIR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Accumulated other comprehensive loss in the equity section of our consolidated balance sheets includes:
September 30, 2024December 31, 2023
 (In thousands)
Foreign currency translation adjustment$(29,077)$(23,026)
Unrealized gain on pension obligations1,489 619 
Unrealized gain on post-retirement benefit obligations8,292 10,623 
Accumulated other comprehensive loss$(19,296)$(11,784)


NOTE 15:Contingencies

In the ordinary course of business, we may become party to legal, regulatory or administrative proceedings or governmental investigations, including environmental and other matters. Damages or penalties may be sought from us in some matters and certain matters may require years to resolve. While the outcome and impact of these proceedings and investigations on us cannot be predicted with certainty, based on the advice of counsel and information currently available to us, management believes that the resolution of these proceedings and investigations through settlement or adverse judgment will not either individually or in the aggregate have a material adverse effect on our financial condition, results of operations or cash flows.

During 2017 and 2019, the EPA granted the Cheyenne, Wyoming refinery (the “Cheyenne Refinery”) and the refinery in Woods Cross, Utah (the “Woods Cross Refinery”) each a one-year small refinery exemption from the Renewable Fuel Standard program requirements for the 2016 and 2018, compliance years. As a result, the Cheyenne Refinery’s and Woods Cross Refinery’s gasoline and diesel production were not subject to the renewable volume obligation for the respective years. Upon each exemption granted, we increased our inventory of RINs and reduced our Cost of sales. On April 7, 2022, the EPA issued a decision reversing the grant of small refinery exemptions for our Woods Cross Refinery and Cheyenne Refinery for the 2018 compliance year. On June 3, 2022, the EPA issued a decision reversing the grant of small refinery exemptions for our Woods Cross Refinery and Cheyenne Refinery for the 2016 compliance year and denying small refinery exemption petitions for our Woods Cross Refinery and Cheyenne Refinery for the 2019 and 2020 compliance years.

Certain of our subsidiaries pursued legal challenges to the EPA’s decisions to deny small refinery exemptions for the 2016, 2018, 2019 and 2020 compliance years. The first lawsuit, filed against the EPA on May 6, 2022, before the U.S. Court of Appeals for the DC Circuit (the “DC Circuit”), sought to have the EPA’s reversal of our 2018 small refinery exemption petitions overturned. The second lawsuit, filed against the EPA on August 5, 2022, before the DC Circuit, sought to have the EPA’s reversal of our 2016 small refinery exemption petitions overturned and to have the EPA’s denial of our 2019 and 2020 small refinery exemption petitions reversed.

In addition, pursuant to the June 2022 and April 2022 decisions, respectively, the EPA established an alternative compliance demonstration to not impose obligations on small refineries that had exemptions reversed for the 2016 and 2018 compliance years. On June 24, 2022, Growth Energy filed two lawsuits in the DC Circuit against the EPA, challenging the alternative compliance demonstration for the 2016 and 2018 compliance years. On July 25, 2022, certain of our subsidiaries intervened on behalf of the EPA to aid the defense of the EPA’s alternative compliance demonstration decision.

On July 26, 2024, the DC Circuit issued a favorable decision vacating the EPA’s denial of all of our small refinery exemption petitions, finding the denial to be unlawful. The DC Circuit remanded the small refinery exemption petitions to the EPA for new determination. The DC Circuit also upheld the alternative compliance demonstration and denied Growth Energy’s challenge.

It is too early to determine the final impact of the DC Circuit’s decisions. We are unable to estimate the costs we may incur, if any, at this time.

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HF SINCLAIR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
HF Sinclair Navajo Refining LLC (“HFS Navajo”) has been engaged in discussions with, and has responded to document requests from, the EPA, the United States Department of Justice (the “DOJ”) and the New Mexico Environment Department (the “NMED”) (collectively, the “Navajo Matter Government Agencies”) regarding HFS Navajo’s compliance with the Clean Air Act (“CAA”) and underlying regulations, and similar New Mexico laws and regulations, at its Artesia and Lovington, New Mexico refineries. The discussions have included the following topics: (a) alleged noncompliance with CAA’s National Emission Standards for Hazardous Air Pollutants (“NESHAP”) and New Source Performance Standards (“NSPS”) at the Artesia refinery, which were set forth in a Notice of Violation (“May 2020 NOV”) issued by the EPA in May 2020; (b) a Post Inspection Notice issued in June 2020 by the NMED, alleging noncompliance issues similar to those alleged by the EPA in its May 2020 NOV as well as alleged noncompliance with the State Implementation Plan (“SIP”) and the Title V permit operating programs; (c) an information request issued in September 2020 by the EPA, pursuant to CAA Section 114, related to benzene fenceline monitoring, flare fuel gas, leak detection and repair, storage vessels and tanks, and other information regarding the Artesia refinery; (d) an information request issued by the EPA in May 2021, pursuant to CAA Section 114, requesting additional information and testing related to certain tanks at the Artesia refinery; and (e) informal information requests related to, among other things, the Artesia refinery’s wastewater treatment plant, oil water separators and heat exchangers. In each of April 2022, June 2023 and August 2023, the EPA alleged additional CAA noncompliance at the Artesia refinery beyond the allegations in the May 2020 NOV, including alleged noncompliance with NESHAP, NSPS, SIP, Title V and other requirements.

Beginning in the spring of 2021, HFS Navajo and the Navajo Matter Government Agencies began monthly meetings to discuss potential injunctive relief measures to address the alleged noncompliance at the Artesia refinery. In September 2021 and August 2023, the EPA presented to HFS Navajo potential claims for alleged noncompliance with a 2002 consent decree. In September 2024, the Navajo Matter Government Agencies presented to HFS Navajo a proposed penalty demand for the alleged noncompliance at the Artesia refinery. HFS Navajo continues to assess the factual basis for the alleged noncompliance and the proposed penalty demand and continues to engage in work with the Navajo Matter Government Agencies to resolve these issues.

It is too early to predict the outcome of this matter or the timing of resolution. We are unable to estimate the costs we may incur, if any, at this time.


NOTE 16:Segment Information

Our operations are organized into five reportable segments: Refining, Renewables, Marketing, Lubricants & Specialties and Midstream. Our operations that are not included in one of these five reportable segments are included in Corporate and Other. Intersegment transactions are eliminated in our consolidated financial statements and are included in Eliminations. Corporate and Other and Eliminations are aggregated and presented under the Corporate, Other and Eliminations column.

The Refining segment represents the operations of our El Dorado, Tulsa, Navajo, Woods Cross, Puget Sound, Parco and Casper refineries and HF Sinclair Asphalt Company LLC (“Asphalt”). Refining activities involve the purchase and refining of crude oil and wholesale marketing of refined products, such as gasoline, diesel fuel and jet fuel. These petroleum products are primarily marketed in the Mid-Continent, Southwest and Rocky Mountains extending into the Pacific Northwest geographic regions of the United States. Asphalt operates various asphalt terminals in Arizona, New Mexico and Oklahoma.

The Renewables segment represents the operations of our Cheyenne renewable diesel unit (“RDU”), Artesia RDU, Sinclair RDU and the pre-treatment unit at our Artesia, New Mexico facility.

The Marketing segment represents branded fuel sales to Sinclair branded sites in the United States and licensing fees for the use of the Sinclair brand at additional locations throughout the country. The Marketing segment also includes branded fuel sales to non-Sinclair branded sites from legacy HollyFrontier Corporation (“HollyFrontier”) agreements and revenues from other marketing activities. Our branded sites are located in several states across the United States with the highest concentration of the sites located in our West and Mid-Continent regions.

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HF SINCLAIR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The Lubricants & Specialties segment represents Petro-Canada Lubricants Inc.’s production operations, located in Mississauga, Ontario, which includes lubricant products such as base oils, white oils, specialty products and finished lubricants, and the operations of our Petro-Canada Lubricants Inc.’s business that includes the marketing of products to both retail and wholesale outlets through a global sales network with locations in Canada, the United States and Europe. Additionally, the Lubricants & Specialties segment includes specialty lubricant products produced at our Tulsa refineries that are marketed throughout North America and are distributed in Central and South America and the operations of Red Giant Oil Company LLC, one of the leading suppliers of locomotive engine oil in North America. Also, the Lubricants & Specialties segment includes Sonneborn, a producer of specialty hydrocarbon chemicals such as white oils, petrolatums and waxes with manufacturing facilities in the United States and Europe.

The Midstream segment includes all of the operations of HEP, which owns and operates logistics and refinery assets consisting of petroleum product and crude oil pipelines, and terminals, tankage and loading rack facilities in the Mid-Continent, Southwest and Rocky Mountains geographic regions of the United States. The Midstream segment also includes 50% ownership interests in each of Osage Pipeline Company, LLC, the owner of a pipeline running from Cushing, Oklahoma to El Dorado, Kansas, Cheyenne Pipeline, LLC, the owner of a pipeline running from Fort Laramie, Wyoming to Cheyenne, Wyoming, and Cushing Connect, a 25.12% ownership interest in Saddle Butte Pipeline III, LLC, the owner of a pipeline running from the Powder River Basin to Casper, Wyoming, and a 49.995% ownership interest in Pioneer Investments Corp., the owner of a pipeline running from Sinclair, Wyoming to the North Salt Lake City, Utah Terminal. Revenues and other income from the Midstream segment are earned through transactions with unaffiliated parties for pipeline transportation, rental and terminalling operations as well as revenues relating to pipeline transportation, terminalling operations and tankage facilities provided for our refining operations.

Beginning in the first quarter of 2024, our Refining segment acquired from our Midstream segment the refinery processing units at our El Dorado and Woods Cross refineries. Additionally, we amended an intercompany agreement between certain of our subsidiaries within the Refining, Lubricants & Specialties and Midstream segments. As a result, we have revised our Refining, Lubricants & Specialties and Midstream segment information for the periods presented.

The accounting policies for our segments are the same as those described in the summary of significant accounting policies in our Annual Report on Form 10-K for the year ended December 31, 2023.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
RefiningRenewablesMarketingLubricants & SpecialtiesMidstreamCorporate, Other
and Eliminations		Consolidated
Total
(In thousands)
Three Months Ended September 30, 2024
Sales and other revenues:
Revenues from external customers$5,386,710 $160,038 $950,050 $682,589 $27,753 $— $7,207,140 
Intersegment revenues and other (1)
995,001 105,320 — 3,278 136,115 (1,239,714)— 
6,381,711 265,358 950,050 685,867 163,868 (1,239,714)7,207,140 
Cost of sales: (2)
Cost of materials and other (3)
5,731,823 237,321 918,432 509,204 — (1,238,486)6,158,294 
Lower of cost or market inventory valuation adjustments
198,759 3,548 — — — — 202,307 
Operating expenses
485,231 24,959 — 60,404 58,702 277 629,573 
6,415,813 265,828 918,432 569,608 58,702 (1,238,209)6,990,174 
Selling, general and administrative expenses (2)
54,632 1,281 9,476 38,832 3,820 9,973 118,014 
Depreciation and amortization123,348 21,409 6,588 21,661 17,824 18,886 209,716 
Asset impairments— — — — 9,984 — 9,984 
Income (loss) from operations$(212,082)$(23,160)$15,554 $55,766 $73,538 $(30,364)$(120,748)
Earnings of equity method investments$— $— $— $— $7,353 $798 $8,151 
Capital expenditures$70,655 $1,268 $12,874 $10,580 $15,996 $12,231 $123,604 
Three Months Ended September 30, 2023
Sales and other revenues:
Revenues from external customers$6,717,926 $213,144 $1,259,205 $686,123 $29,073 $— $8,905,471 
Intersegment revenues and other (1)
1,333,008 118,033 — 565 123,540 (1,575,146)— 
8,050,934 331,177 1,259,205 686,688 152,613 (1,575,146)8,905,471 
Cost of sales: (2)
Cost of materials and other (3)
6,518,402 294,682 1,230,372 466,459 — (1,574,265)6,935,650 
Lower of cost or market inventory valuation adjustments
(26,842)(17,006)— — — — (43,848)
Operating expenses
478,847 30,198 — 64,965 50,489 (1,967)622,532 
6,970,407 307,874 1,230,372 531,424 50,489 (1,576,232)7,514,334 
Selling, general and administrative expenses (2)
50,345 1,336 7,731 40,051 7,947 16,803 124,213 
Depreciation and amortization118,077 18,904 6,002 22,366 20,274 9,939 195,562 
Income (loss) from operations$912,105 $3,063 $15,100 $92,847 $73,903 $(25,656)$1,071,362 
Earnings of equity method investments$— $— $— $— $3,581 $(572)$3,009 
Capital expenditures$44,866 $2,812 $4,223 $10,070 $5,672 $13,544 $81,187 

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HF SINCLAIR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
RefiningRenewablesMarketingLubricants & SpecialtiesMidstreamCorporate, Other
and Eliminations		Consolidated
Total
(In thousands)
Nine Months Ended September 30, 2024
Sales and other revenues:
Revenues from external customers$16,729,833 $519,935 $2,668,219 $2,084,183 $77,946 $— $22,080,116 
Intersegment revenues and other (1)
2,833,932 233,260 — 11,070 399,118 (3,477,380)— 
19,563,765 753,195 2,668,219 2,095,253 477,064 (3,477,380)22,080,116 
Cost of sales: (2)
Cost of materials and other (3)
17,497,374 687,650 2,590,573 1,533,440 — (3,473,718)18,835,319 
Lower of cost or market inventory valuation adjustments
(21,799)1,613 — — — — (20,186)
Operating expenses
1,406,414 76,125 — 188,849 155,309 1,305 1,828,002 
18,881,989 765,388 2,590,573 1,722,289 155,309 (3,472,413)20,643,135 
Selling, general and administrative expenses (2)
154,089 4,067 24,577 111,609 10,674 21,230 326,246 
Depreciation and amortization362,933 61,467 19,265 66,888 52,887 50,325 613,765 
Asset impairments— — — — 9,984 — 9,984 
Income (loss) from operations$164,754 $(77,727)$33,804 $194,467 $248,210 $(76,522)$486,986 
Earnings of equity method investments$— $— $— $— $21,899 $1,713 $23,612 
Capital expenditures$161,374 $7,188 $33,365 $23,064 $35,246 $36,684 $296,921 
Nine Months Ended September 30, 2023
Sales and other revenues:
Revenues from external customers$18,284,853 $590,620 $3,237,523 $2,105,941 $85,322 $— $24,304,259 
Intersegment revenues and other (1)
3,524,078 311,758 — 10,890 339,596 (4,186,322)— 
21,808,931 902,378 3,237,523 2,116,831 424,918 (4,186,322)24,304,259 
Cost of sales: (2)
Cost of materials and other (3)
18,002,106 816,226 3,162,727 1,515,900 — (4,183,647)19,313,312 
Lower of cost or market inventory valuation adjustments
— (4,114)— — — — (4,114)
Operating expenses
1,391,930 85,942 — 192,592 138,021 230 1,808,715 
19,394,036 898,054 3,162,727 1,708,492 138,021 (4,183,417)21,117,913 
Selling, general and administrative expenses (2)
142,461 3,587 22,821 124,229 18,094 36,322 347,514 
Depreciation and amortization330,702 57,846 17,889 62,113 61,855 28,500 558,905 
Income (loss) from operations$1,941,732 $(57,109)$34,086 $221,997 $206,948 $(67,727)$2,279,927 
Earnings of equity method investments$— $— $— $— $11,008 $(572)$10,436 
Capital expenditures$157,827 $11,193 $15,678 $24,453 $21,936 $30,350 $261,437 
(1)Includes income earned by certain of our subsidiaries in the Midstream segment related to intercompany transportation agreements with certain of our subsidiaries in the Refining and Lubricants & Specialties segments that represent leases. These transactions eliminate in consolidation.
(2)Exclusive of Depreciation and amortization.
(3)Exclusive of Lower of cost or market inventory valuation adjustments.

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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Item 2 contains “forward-looking” statements. See “Forward-Looking Statements” at the beginning of Part I of this Quarterly Report on Form 10-Q. In addition, this Item 2 should be read in conjunction with the accompanying consolidated financial statements and notes, as well as our consolidated financial statements and notes within our Annual Report on Form 10-K for the year ended December 31, 2023, and Exhibit 99.1 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, filed May 8, 2024. In this document, the words “we,” “our,” “ours,” and “us” refer only to HF Sinclair Corporation (“HF Sinclair”) and its consolidated subsidiaries or to HF Sinclair or an individual subsidiary and not to any other person with certain exceptions. References herein to Holly Energy Partners, L.P. (“HEP”) with respect to time periods prior to the closing of the HEP Merger Transaction (as defined below) on December 1, 2023, refer to HEP and its consolidated subsidiaries.

OVERVIEW

We are an independent energy company that produces and markets high-value light products such as gasoline, diesel fuel, jet fuel, renewable diesel and lubricants and other specialty products. We own and operate refineries located in Kansas, Oklahoma, New Mexico, Wyoming, Washington and Utah. We provide petroleum product and crude oil transportation, terminalling, storage and throughput services to our refineries and the petroleum industry. We market our refined products principally in the Southwest United States, the Rocky Mountains extending into the Pacific Northwest and in other neighboring Plains states, and we supply high-quality fuels to more than 1,500 branded stations and license the use of the Sinclair brand at more than 300 additional locations throughout the country. We produce renewable diesel at two of our facilities in Wyoming and our facility in New Mexico. In addition, our subsidiaries produce and market base oils and other specialized lubricants in the United States, Canada and the Netherlands, and export products to more than 80 countries.

For the three months ended September 30, 2024, Net loss attributable to HF Sinclair stockholders was $(75.9) million compared to a Net income attributable to HF Sinclair stockholders of $790.9 million for the three months ended September 30, 2023. For the nine months ended September 30, 2024, Net income attributable to HF Sinclair stockholders was $390.5 million compared to $1,651.8 million for the nine months ended September 30, 2023.

In the Refining segment, we continued to see lower refining margins in the West region in the third quarter of 2024 compared to the prior two quarters, principally as a result of high global supply of transportation fuels across the industry that continues to weigh on product margins. Additionally, we completed the planned turnaround at our Parco refinery and began a planned turnaround at our El Dorado refinery during the period. For the fourth quarter of 2024, we expect to run between 565,000-600,000 barrels per day of crude oil, which reflects the planned turnaround at our El Dorado refinery.

In the Renewables segment, we continued to see increased sales volumes and feedstock optimization despite ongoing weakness in RINs and Low Carbon Fuel Standard (“LCFS”) prices in the third quarter of 2024. For the fourth quarter of 2024, we expect continued weakness in RINs and LCFS prices to impact renewable diesel margins.

In the Marketing segment, we continued to see strong value in the Sinclair branded sites during the third quarter of 2024 as the marketing business continued to provide a consistent sales channel with margin uplift for our produced fuels. We expect to grow the number of branded sites by approximately 10% over the next six to twelve months.

In the Lubricants & Specialties segment, we continued to see strong performance (excluding first-in, first out (“FIFO”) impacts), driven by increased sales volumes, sales mix optimization and base oil integration across our portfolio during the third quarter of 2024.

In the Midstream segment, our results continued to benefit from increased sales volumes and higher tariffs in the third quarter of 2024.

We continue to adjust our operational plans to evolving market conditions. The extent to which our future results are affected by volatile regional and global economic conditions will depend on various factors and consequences beyond our control.

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In August 2023, our Board of Directors authorized a $1.0 billion share repurchase program, and we continued to repurchase shares in the first and second quarter of 2024 under this program. On May 7, 2024, our Board of Directors authorized a new $1.0 billion share repurchase program (the “May 2024 Share Repurchase Program”), and we continued to repurchase shares this quarter under the May 2024 Share Repurchase Program. The timing and amount of share repurchases under the May 2024 Share Repurchase Program, including those from REH Company (“REH Company” and together with its affiliate REH Advisors Inc., “REH”), will depend on market conditions and corporate, tax, regulatory and other relevant conditions. We repurchased 2,665,000 and 11,944,177 shares for $126.5 million and $663.7 million through the three and nine months ended September 30, 2024, respectively, under open market and privately negotiated purchases. On October 31, 2024, our Board of Directors announced that it declared a regular quarterly dividend in the amount of $0.50 per share, payable on December 4, 2024 to holders of record of common stock on November 21, 2024.

HEP Merger Transaction
On December 1, 2023, pursuant to the Agreement and Plan of Merger, dated as of August 15, 2023 (the “Merger Agreement”), by and among HEP, HF Sinclair, Navajo Pipeline Co., L.P., a Delaware limited partnership and an indirect wholly owned subsidiary of HF Sinclair (“HoldCo”), Holly Apple Holdings LLC, a Delaware limited liability company and a wholly owned subsidiary of HoldCo (“Merger Sub”), HEP Logistics Holdings, L.P., a Delaware limited partnership and the general partner of HEP (“HLH”), and Holly Logistic Services, L.L.C., a Delaware limited liability company and the general partner of HLH, Merger Sub merged with and into HEP, with HEP surviving as an indirect, wholly owned subsidiary of HF Sinclair (the “HEP Merger Transaction”).

Under the terms of the Merger Agreement, each outstanding common unit representing a limited partner interest in HEP (an “HEP common unit”), other than the HEP common units already owned by HF Sinclair and its subsidiaries, was converted into the right to receive 0.315 shares of HF Sinclair common stock and $4.00 in cash, without interest. The Merger Agreement consideration totaled $267.6 million in cash and resulted in the issuance of 21,072,326 shares of HF Sinclair common stock from treasury stock.

For a description of our existing indebtedness, as well as the changes thereto associated with the HEP Merger Transaction, see Note 11 “Debt” in the Notes to Consolidated Financial Statements.

Renewable Fuel Standard Regulations
Pursuant to the 2007 Energy Independence and Security Act, the Environmental Protection Agency (“EPA”) promulgated the Renewable Fuel Standard (“RFS”) regulations, which increased the volume of renewable fuels mandated to be blended into the nation’s fuel supply. The regulations, in part, require refiners to add annually increasing amounts of “renewable fuels” to their petroleum products or purchase credits, known as RINs, in lieu of such blending. Compliance with RFS regulations significantly increases our Cost of materials and other, with RINs costs totaling $119.4 million and $333.5 million for the three and nine months ended September 30, 2024, respectively, compared to $237.8 million and $596.1 million for the three and nine months ended September 30, 2023, respectively. At September 30, 2024, our open RINs credit obligations were $27.5 million.

A more detailed discussion of our financial and operating results for the three and nine months ended September 30, 2024 and 2023 is presented in the following sections.
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RESULTS OF OPERATIONS

Financial Data
 Three Months Ended September 30,Change from 2023
 20242023ChangePercent
 (In thousands, except per share data)
Sales and other revenues$7,207,140 $8,905,471 $(1,698,331)(19)%
Operating costs and expenses:
Cost of sales: (1)
Cost of materials and other (2)
6,158,294 6,935,650 (777,356)(11)%
Lower of cost or market inventory valuation adjustments202,307 (43,848)246,155 (561)%
Operating expenses
629,573 622,532 7,041 1 %
6,990,174 7,514,334 (524,160)(7)%
Selling, general and administrative expenses (1)
118,014 124,213 (6,199)(5)%
Depreciation and amortization209,716 195,562 14,154 7 %
Asset impairments9,984 — 9,984 100 %
Total operating costs and expenses7,327,888 7,834,109 (506,221)(6)%
Income (loss) from operations(120,748)1,071,362 (1,192,110)(111)%
Other income (expense):
Earnings of equity method investments8,151 3,009 5,142 171 %
Interest income18,309 24,577 (6,268)(26)%
Interest expense(40,396)(48,686)8,290 (17)%
Gain on foreign currency transactions1,401 860 541 63 %
Gain on sale of assets and other1,936 8,954 (7,018)(78)%
(10,599)(11,286)687 (6)%
Income (loss) before income taxes(131,347)1,060,076 (1,191,423)(112)%
Income tax expense (benefit)(57,266)235,015 (292,281)(124)%
Net income (loss)(74,081)825,061 (899,142)(109)%
Less net income attributable to noncontrolling interest1,863 34,139 (32,276)(95)%
Net income (loss) attributable to HF Sinclair stockholders$(75,944)$790,922 $(866,866)(110)%
Earnings (loss) per share attributable to HF Sinclair stockholders:
Basic$(0.40)$4.23 $(4.63)(109)%
Diluted$(0.40)$4.23 $(4.63)(109)%
Cash dividends declared per common share$0.50 $0.45 $0.05 11 %
Average number of common shares outstanding:
Basic189,840 185,456 4,384 2 %
Diluted189,840 185,456 4,384 2 %
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 Nine Months Ended September 30,Change from 2023
 20242023ChangePercent
 (In thousands, except per share data)
Sales and other revenues$22,080,116 $24,304,259 $(2,224,143)(9)%
Operating costs and expenses:
Cost of sales (1):
Cost of materials and other (2)
18,835,319 19,313,312 (477,993)(2)%
Lower of cost or market inventory valuation adjustments(20,186)(4,114)(16,072)391 %
Operating expenses (1)
1,828,002 1,808,715 19,287 1 %
20,643,135 21,117,913 (474,778)(2)%
Selling, general and administrative expenses (1)
326,246 347,514 (21,268)(6)%
Depreciation and amortization613,765 558,905 54,860 10 %
 Asset impairments9,984 — 9,984 100 %
Total operating costs and expenses21,593,130 22,024,332 (431,202)(2)%
Income from operations486,986 2,279,927 (1,792,941)(79)%
Other income (expense):
Earnings of equity method investments23,612 10,436 13,176 126 %
Interest income58,983 62,103 (3,120)(5)%
Interest expense(126,536)(141,490)14,954 (11)%
Gain on foreign currency transactions1,475 2,478 (1,003)(40)%
Gain on sale of assets and other3,691 11,737 (8,046)(69)%
(38,775)(54,736)15,961 (29)%
Income before income taxes448,211 2,225,191 (1,776,980)(80)%
Income tax expense52,190 480,640 (428,450)(89)%
Net income 396,021 1,744,551 (1,348,530)(77)%
Less net income attributable to noncontrolling interest5,513 92,702 (87,189)(94)%
Net income attributable to HF Sinclair stockholders$390,508 $1,651,849 $(1,261,341)(76)%
Earnings (loss) per share attributable to HF Sinclair stockholders:
Basic$2.01 $8.57 $(6.56)(77)%
Diluted$2.01 $8.57 $(6.56)(77)%
Cash dividends declared per common share$1.50 $1.35 $0.15 11 %
Average number of common shares outstanding:
Basic193,341 191,047 2,294 1 %
Diluted193,341 191,047 2,294 1 %
(1)Exclusive of Depreciation and amortization.
(2)Exclusive of Lower of cost or market inventory valuation adjustments.

Balance Sheet Data
September 30, 2024December 31, 2023
(Unaudited)
 (In thousands)
Cash and cash equivalents$1,229,482 $1,353,747 
Working capital$2,393,303 $3,371,905 
Total assets$16,887,661 $17,716,265 
Total debt$2,636,805 $2,739,083 
Total equity$9,670,410 $10,237,298 

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Other Financial Data 
 Three Months Ended September 30,Nine Months Ended September 30,
 2024202320242023
 (In thousands)
Net cash provided by operating activities$707,578 $1,398,906 $1,250,394 $2,066,571 
Net cash used for investing activities$(121,059)$(71,440)$(294,603)$(247,720)
Net cash used for financing activities$(226,982)$(725,480)$(1,078,726)$(1,268,273)
Capital expenditures$123,604 $81,187 $296,921 $261,437 
EBITDA (1)
$98,593 $1,245,608 $1,124,016 $2,770,781 
(1)Earnings before interest, taxes, depreciation and amortization, which we refer to as “EBITDA,” is calculated as Net income attributable to HF Sinclair stockholders plus (i) Interest expense, net of Interest income, (ii) Income tax expense (benefit), and (iii) Depreciation and amortization. EBITDA is not a calculation provided for under GAAP; however, the amounts included in the EBITDA calculation are derived from amounts included in our consolidated financial statements. EBITDA should not be considered as an alternative to net income or operating income as an indication of our operating performance or as an alternative to operating cash flow as a measure of liquidity. EBITDA is not necessarily comparable to similarly titled measures of other companies. EBITDA is presented here because it is a widely used financial indicator used by investors and analysts to measure performance. EBITDA is also used by our management for internal analysis and as a basis for financial covenants. EBITDA presented above is reconciled to net income under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q.

Supplemental Segment Operating Data

Our operations are organized into five reportable segments, Refining, Renewables, Marketing, Lubricants & Specialties and Midstream. See Note 16 “Segment Information” in the Notes to Consolidated Financial Statements for additional information on our reportable segments.

Refining Segment Operating Data

The disaggregation of our refining geographic operating data is presented in two regions, Mid-Continent and West, to best reflect the economic drivers of our refining operations. The Mid-Continent region is comprised of the El Dorado and Tulsa refineries. The West region is comprised of the Puget Sound, Navajo, Woods Cross, Parco and Casper refineries. The following tables set forth information, including non-GAAP performance measures, about our consolidated refinery operations. Adjusted refinery gross margin per produced barrel sold is total Refining segment gross margin plus Lower of cost or market inventory valuation adjustments, Depreciation and amortization and Operating expenses, divided by sales volumes of produced refined products sold. This margin measure does not include the non-cash effects of Lower of cost or market inventory valuation adjustments, which relate to volumes in inventory at the end of the period. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q.

Three Months Ended September 30,Nine Months Ended September 30,
 2024202320242023
Mid-Continent Region
Crude charge (BPD) (1)
263,170 250,280 262,670 230,130 
Refinery throughput (BPD) (2)
279,210 269,270 278,210 249,170 
Sales of produced refined products (BPD) (3)
274,870 257,270 276,830 234,470 
Refinery utilization (4)
101.2 %96.3 %101.0 %88.5 %
Average per produced barrel sold: (5)
Gross margin (6)
$(3.91)$13.78 $1.35 $10.80 
Adjusted refinery gross margin (7)
$9.38 $21.64 $9.40 $20.43 
Operating expenses (8)
6.56 6.69 6.28 7.34 
Adjusted refinery gross margin, less operating expenses$2.82 $14.95 $3.12 $13.09 
Operating expenses per throughput barrel (9)
$6.45 $6.39 $6.25 $6.91 
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Three Months Ended September 30,Nine Months Ended September 30,
 2024202320242023
Mid-Continent Region
Feedstocks:
Sweet crude oil54 %53 %53 %59 %
Sour crude oil24 %22 %23 %18 %
Heavy sour crude oil16 %18 %18 %15 %
Other feedstocks and blends6 %7 %6 %8 %
Total100 %100 %100 %100 %
Sales of produced refined products:
Gasolines50 %52 %52 %51 %
Diesel fuels31 %30 %31 %30 %
Jet fuels7 %6 %6 %6 %
Fuel oil1 %1 %1 %1 %
Asphalt5 %4 %4 %4 %
Lubricants3 %3 %4 %4 %
LPG and other3 %4 %2 %4 %
Total100 %100 %100 %100 %
West Region
Crude charge (BPD) (1)
343,840 351,650 352,860 321,700 
Refinery throughput (BPD) (2)
370,540 375,830 378,310 351,880 
Sales of produced refined products (BPD) (3)
379,530 376,910 373,890 348,740 
Refinery utilization (4)
82.3 %84.1 %84.4 %77.0 %
Average per produced barrel sold: (5)
Gross margin (6)
$(1.67)$18.35 $2.11 $14.63 
Adjusted refinery gross margin (7)
$11.82 $29.42 $13.21 $26.25 
Operating expenses (8)
9.15 9.24 9.08 9.69 
Adjusted refinery gross margin, less operating expenses$2.67 $20.18 $4.13 $16.56 
Operating expenses per throughput barrel (9)
$9.37 $9.27 $8.97 $9.60 
Feedstocks:
Sweet crude oil34 %30 %34 %31 %
Sour crude oil44 %45 %43 %43 %
Heavy sour crude oil9 %13 %10 %12 %
Wax crude oil
6 %6 %6 %6 %
Other feedstocks and blends7 %6 %7 %8 %
Total100 %100 %100 %100 %
Sales of produced refined products:
Gasolines53 %51 %52 %53 %
Diesel fuels31 %32 %32 %31 %
Jet fuels6 %7 %6 %6 %
Fuel oil1 %2 %2 %2 %
Asphalt3 %3 %2 %2 %
LPG and other6 %5 %6 %6 %
Total100 %100 %100 %100 %




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Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Consolidated
Crude charge (BPD) (1)
607,010 601,930 615,530 551,830 
Refinery throughput (BPD) (2)
649,750 645,100 656,520 601,050 
Sales of produced refined products (BPD) (3)
654,400 634,180 650,720 583,210 
Refinery utilization (4)
89.5 %88.8 %90.8 %81.4 %
Average per produced barrel sold: (5)
Gross margin (6)
$(2.62)$16.50 $1.79 $13.09 
Adjusted refinery gross margin (7)
$10.79 $26.27 $11.59 $23.91 
Operating expenses (8)
8.06 8.21 7.89 8.74 
Adjusted refinery gross margin, less operating expenses$2.73 $18.06 $3.70 $15.17 
Operating expenses per throughput barrel (9)
$8.12 $8.07 $7.82 $8.48 
Feedstocks:
Sweet crude oil42 %40 %42 %43 %
Sour crude oil36 %35 %34 %33 %
Heavy sour crude oil12 %15 %14 %13 %
Wax crude oil
3 %3 %4 %3 %
Other feedstocks and blends7 %7 %6 %8 %
Total100 %100 %100 %100 %
Sales of produced refined products:
Gasolines52 %52 %52 %53 %
Diesel fuels31 %31 %32 %30 %
Jet fuels7 %7 %6 %6 %
Fuel oil1 %1 %1 %1 %
Asphalt4 %3 %3 %3 %
Base oils1 %1 %2 %2 %
LPG and other4 %5 %4 %5 %
Total100 %100 %100 %100 %
(1)Crude charge represents the barrels per day of crude oil processed at our refineries.
(2)Refinery throughput represents the barrels per day of crude and other refinery feedstocks input to the crude units and other conversion units at our refineries.
(3)Represents barrels sold of refined products produced at our refineries (including Asphalt and intersegment sales) and does not include volumes of refined products purchased for resale or volumes of excess crude oil sold.
(4)Represents crude charge divided by total crude capacity (BPSD). Our consolidated crude capacity is 678,000 BPSD.
(5)Represents the average amount per produced barrel sold, which is a non-GAAP measure. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q.
(6)Gross margin represents total Refining segment Sales and other revenues less Cost of materials and other, Lower of cost or market inventory valuation adjustments, Operating expenses and Depreciation and amortization, divided by sales volumes of refined products produced at our refineries.
(7)Adjusted refinery gross margin is a non-GAAP measure and represents total Refining segment gross margin plus Lower of cost or market inventory valuation adjustments, Depreciation and amortization and Operating expenses, divided by sales volumes of refined products produced at our refineries. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q.
(8)Represents total Refining segment Operating expenses, exclusive of Depreciation and amortization, divided by sales volumes of refined products produced at our refineries.
(9)Represents total Refining segment Operating expenses, exclusive of Depreciation and amortization, divided by Refinery throughput.



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Renewables Segment Operating Data

The following table sets forth information, including non-GAAP performance measures, about our renewables operations. Adjusted renewables gross margin per produced gallon sold is total Renewables segment gross margin plus Lower of cost or market inventory valuation adjustments, Depreciation and amortization and Operating expenses, divided by sales volumes of produced renewables products sold. This margin measure does not include the non-cash effects of Lower of cost or market inventory valuation adjustments, which relate to volumes in inventory at the end of the period. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q.
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Renewables
Sales volumes (in thousand gallons)68,755 54,909 193,484 152,896 
Average per produced gallon sold: (1)
Gross margin (2)
$(0.32)$0.08 $(0.38)$(0.35)
Adjusted renewables gross margin (3)
$0.41 $0.66 $0.34 $0.56 
Operating expenses (4)
0.36 0.55 0.39 0.56 
Adjusted renewables gross margin, less operating expenses$0.05 $0.11 $(0.05)$— 
(1)Represents the average amount per produced gallon sold, which is a non-GAAP measure. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q.
(2)Gross margin represents total Renewables segment Sales and other revenues less Cost of materials and other, Lower of cost or market inventory valuation adjustments, Operating expenses and Depreciation and amortization, divided by sales volumes of renewable diesel produced at our renewable diesel units.
(3)Adjusted renewables gross margin is a non-GAAP measure and represents total Renewables segment gross margin plus Lower of cost or market inventory valuation adjustments, Depreciation and amortization and Operating expenses, divided by sales volumes of renewable diesel produced at our renewable diesel units. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q.
(4)Represents total Renewables segment Operating expenses, exclusive of Depreciation and amortization, divided by sales volumes of renewable diesel produced at our renewable diesel units.

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Marketing Segment Operating Data

The following table sets forth information, including non-GAAP performance measures, about our marketing operations and includes our Sinclair branded fuel business. Adjusted marketing gross margin per gallon sold is total Marketing segment gross margin plus Depreciation and amortization, divided by sales volumes of marketing products sold. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q.
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Marketing
Number of branded sites at period end (1)
1,5861,5351,5861,535
Sales volumes (in thousand gallons)365,036398,3991,043,1831,091,216
Average per gallon sold: (2)
Gross margin (3)
$0.07 $0.06 $0.06 $0.05 
Adjusted marketing gross margin (4)
$0.09 $0.07 $0.07 $0.07 
(1)Includes non-Sinclair branded sites from legacy HollyFrontier agreements.
(2)Represents the average amount per gallon sold, which is a non-GAAP measure. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q.
(3)Gross margin represents total Marketing segment Sales and other revenues less Cost of materials and other and Depreciation and amortization, divided by sales volumes of marketing products sold.
(4)Adjusted marketing gross margin is a non-GAAP measure and represents total Marketing segment gross margin plus Depreciation and amortization, divided by sales volumes of marketing products sold. Reconciliations to amounts reported under GAAP are provided under “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q.

Lubricants & Specialties Segment Operating Data

The following table sets forth information about our lubricants and specialties operations:
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Lubricants & Specialties
Sales of produced refined products (BPD)32,914 30,400 32,977 30,440 
Sales of produced refined products:
Finished products45 %49 %47 %51 %
Base oils27 %27 %27 %27 %
Other28 %24 %26 %22 %
Total100 %100 %100 %100 %

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Midstream Segment Operating Data

The following table sets forth information about our midstream operations:
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Midstream
Volumes (BPD)
Pipelines:
Affiliates—refined product pipelines156,346 152,541 165,566 144,082 
Affiliates—intermediate pipelines145,236 107,019 145,068 108,579 
Affiliates—crude pipelines459,273 426,418 442,317 429,965 
760,855 685,978 752,951 682,626 
Third parties—refined product pipelines39,190 33,549 39,170 38,702 
Third parties—crude pipelines240,496 204,970 201,256 196,552 
1,040,541 924,497 993,377 917,880 
Terminals and loading racks:
Affiliates (1)
1,019,229 971,678 1,030,624 902,101 
Third parties40,124 40,440 37,621 44,263 
1,059,353 1,012,118 1,068,245 946,364 
Total for pipelines and terminals assets (BPD)2,099,894 1,936,615 2,061,622 1,864,244 
(1)Certain affiliate volumetric non-financial information has been recast to conform to current year presentation.

Results of Operations – Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

Summary
Net loss attributable to HF Sinclair stockholders for the three months ended September 30, 2024, was $(75.9) million ($(0.40) per basic and diluted share), a $866.9 million decrease compared to Net income attributable to HF Sinclair stockholders of $790.9 million ($4.23 per basic and diluted share) for the three months ended September 30, 2023. The decrease in net income was principally driven by lower adjusted refinery gross margins in both the West and Mid-Continent regions, partially offset by higher refined product sales volumes. Lower of cost or market inventory valuation adjustments related to our refining and renewables Inventories decreased pre-tax earnings by $202.3 million for the three months ended September 30, 2024, and increased pre-tax earnings by $43.8 million for the three months ended September 30, 2023. Adjusted refinery gross margins for the three months ended September 30, 2024 decreased to $10.79 per produced barrel sold as compared to $26.27 for the three months ended September 30, 2023.

Sales and Other Revenues
Sales and other revenues decreased 19.1% from $8,905.5 million for the three months ended September 30, 2023, to $7,207.1 million for the three months ended September 30, 2024, principally due to lower refined product sales prices, partially offset by higher refined product sales volumes. Sales and other revenues included $950.1 million, $682.6 million, $27.8 million and $160.0 million in unaffiliated revenues related to our Marketing, Lubricants & Specialties, Midstream and Renewables segments, respectively, for the three months ended September 30, 2024. Sales and other revenues included $1,259.2 million, $686.1 million, $29.1 million and $213.1 million in unaffiliated revenues related to our Marketing, Lubricants & Specialties, Midstream and Renewables segments, respectively, for the three months ended September 30, 2023.

Cost of Materials and Other
Cost of materials and other, exclusive of Lower of cost or market inventory valuation adjustments, decreased 11% from $6,935.7 million for the three months ended September 30, 2023, to $6,158.3 million for the three months ended September 30, 2024, principally due to lower crude oil costs, partially offset by higher refined product sales volumes. Within our Lubricants & Specialties segment, the FIFO impact was a charge of $26.7 million for the three months ended September 30, 2024, compared to a benefit of $29.9 million for the three months ended September 30, 2023.

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During the third quarter of 2024, we recognized a Lower of cost or market inventory valuation adjustment charge related to our Refining and Renewables segment Inventories of $198.8 million and $3.5 million, respectively. Additionally, during the third quarter of 2023, we recognized a Lower of cost or market inventory valuation adjustment benefit related to our Refining and Renewables segment Inventories of $26.8 million and $17.0 million, respectively.

Adjusted Refinery Gross Margins
Adjusted refinery gross margin per produced barrel sold decreased 59% from $26.27 for the three months ended September 30, 2023, to $10.79 for the three months ended September 30, 2024. The decrease was due to lower average sales prices per barrel, partially offset by lower crude oil and feedstock prices during the three months ended September 30, 2024. Adjusted refinery gross margin per produced barrel sold does not include the non-cash effects of Lower of cost or market inventory valuation adjustments, which relate to volumes in inventory at the end of the period, Operating expenses, and Depreciation and amortization. See “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q for a reconciliation to the statement of operations sales price of products sold and cost of products purchased.

Operating Expenses
Operating expenses increased 1% from $622.5 million for the three months ended September 30, 2023, to $629.6 million for the three months ended September 30, 2024, primarily due to other miscellaneous costs.

Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased 5% from $124.2 million for the three months ended September 30, 2023, to $118.0 million for the three months ended September 30, 2024, primarily due to lower incentive compensation and professional costs, partially offset by higher costs related to information technology. We incurred $0.1 million and $6.6 million in acquisition integration and regulatory costs during the three months ended September 30, 2024 and 2023, respectively.

Depreciation and Amortization Expenses
Depreciation and amortization increased 7% from $195.6 million for the three months ended September 30, 2023, to $209.7 million for the three months ended September 30, 2024, principally due to Depreciation and amortization attributable to additional capitalized refinery turnaround costs and capitalized improvement projects as compared to the prior period.

Asset Impairments
For the three months ended September 30, 2024, we recorded impairments totaling $10.0 million in our Midstream segment related to certain logistic assets.

Interest Income
Interest income was $18.3 million for the three months ended September 30, 2024, compared to $24.6 million for the three months ended September 30, 2023. The decrease in Interest income was primarily due to the decrease in average cash balance.

Interest Expense
Interest expense was $40.4 million for the three months ended September 30, 2024, compared to $48.7 million for the three months ended September 30, 2023. This decrease was primarily due to a reduction in total debt outstanding as compared to the prior period.

Gain (loss) on Foreign Currency Transactions
Remeasurement adjustments resulting from the foreign currency conversion of the intercompany financing notes payable by Petro-Canada Lubricants Inc. net of mark-to-market valuations on foreign exchange forward contracts with banks which hedge the foreign currency exposure on these intercompany notes were a net gain of $1.4 million and $0.9 million for the three months ended September 30, 2024 and 2023, respectively. For the three months ended September 30, 2024 and 2023, the change in foreign currency transactions included a loss of $4.1 million and a gain of $10.2 million, respectively, on foreign exchange forward contracts (utilized as an economic hedge).

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Income Taxes
For the three months ended September 30, 2024, we recorded an income tax benefit of $57.3 million compared to $235.0 million of tax expense for the three months ended September 30, 2023. This decrease was principally due to decreased earnings during the three months ended September 30, 2024, compared to the same period of 2023. Our effective tax rates were 43.6% and 22.2% for the three months ended September 30, 2024 and 2023, respectively. The difference between the U.S. federal statutory rate and the effective tax rate for the three months ended September 30, 2024, is primarily due to the relationship between pre-tax results and non-taxable permanent differences. The difference in the U.S. federal statutory rate and the effective tax rate for the three months ended September 30, 2023, was primarily due to the impact of federal tax credits and the relationship between pre-tax results and the earnings attributable to the noncontrolling interest that is not included in income for tax purposes.

Results of Operations – Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Summary
Net income attributable to HF Sinclair stockholders for the nine months ended September 30, 2024 was $390.5 million ($2.01 per basic and diluted share), a $1,261.3 million decrease compared to $1,651.8 million ($8.57 per basic and diluted share) for the nine months ended September 30, 2023. The decrease in Net income attributable to HF Sinclair stockholders was principally driven by lower adjusted refinery gross margins in both the West and Mid-Continent regions, partially offset by higher refined product sales volumes. Lower of cost or market inventory adjustments related to our Refining and Renewables segments’ inventories increased pre-tax earnings by $20.2 million and $4.1 million for the nine months ended September 30, 2024 and 2023, respectively. Adjusted refinery gross margins for the nine months ended September 30, 2024 decreased to $11.59 per produced barrel sold as compared to $23.91 for the nine months ended September 30, 2023.

Sales and Other Revenues
Sales and other revenues decreased 9% from $24,304.3 million for the nine months ended September 30, 2023 to $22,080.1 million for the nine months ended September 30, 2024, principally due to decreased refined product sales prices and lower excess crude oil sales volumes as a result of fewer planned maintenance activities in 2024, partially offset by higher refined product sales volumes. Sales and other revenues included $2,668.2 million, $2,084.2 million, $77.9 million and $519.9 million in unaffiliated revenues related to our Marketing, Lubricants & Specialties, Midstream and Renewables segments, respectively, for the nine months ended September 30, 2024. Sales and other revenues included $3,237.5 million, $2,105.9 million, $85.3 million and $590.6 million in unaffiliated revenues related to our Marketing, Lubricants & Specialties, Midstream and Renewables segments, respectively, for the nine months ended September 30, 2023.

Cost of Materials and Other
Cost of materials and other, exclusive of Lower of cost or market inventory valuation adjustments, decreased 2% from $19,313.3 million for the nine months ended September 30, 2023 to $18,835.3 million for the nine months ended September 30, 2024, principally due to lower excess crude oil sales volumes as a result of fewer planned maintenance activities in 2024, partially offset by higher refined product sales volumes. Within our Lubricants & Specialties segment, FIFO impact was a charge of $42.4 million and a benefit of $16.4 million for the nine months ended September 30, 2024 and 2023, respectively.

During the nine months ended September 30, 2024, we recognized a Lower of cost or market inventory valuation adjustment benefit related to our Refining segment inventories of $21.8 million. Additionally, during the nine months ended September 30, 2024, we recognized a Lower of cost or market inventory valuation adjustment charge related to our Renewables segment inventories of $1.6 million as compared to a benefit of $4.1 million during the nine months ended September 30, 2023.

Adjusted Refinery Gross Margins
Adjusted refinery gross margin per produced barrel sold decreased 52% from $23.91 for the nine months ended September 30, 2023 to $11.59 for the nine months ended September 30, 2024, principally due to lower average sales prices per barrel during the nine months ended September 30, 2024. Adjusted refinery gross margin per produced barrel sold does not include the non-cash effects of Lower of cost or market inventory valuation adjustments, which relate to volumes in inventory at the end of the period, Operating expenses, and Depreciation and amortization. See “Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles” following Item 3 of Part I of this Quarterly Report on Form 10-Q for a reconciliation to the statement of operations sales price of products sold and cost of products purchased.

Operating Expenses
Operating expenses increased 1% from $1,808.7 million for the nine months ended September 30, 2023, to $1,828.0 million for the nine months ended September 30, 2024, primarily due to increased maintenance and other miscellaneous costs, partially offset by lower natural gas costs.
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Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased 6% from $347.5 million for the nine months ended September 30, 2023, to $326.2 million for the nine months ended September 30, 2024, primarily due to lower professional costs, a decrease in acquisition integration and regulatory costs, and lower incentive compensation, partially offset by higher costs related to information technology. We incurred $2.0 million and $14.1 million in acquisition integration and regulatory costs during the nine months ended September 30, 2024 and 2023, respectively.

Depreciation and Amortization Expenses
Depreciation and amortization increased 10% from $558.9 million for the nine months ended September 30, 2023, to $613.8 million for the nine months ended September 30, 2024, principally due to additional capitalized refinery turnaround costs and capitalized improvement projects as compared to the prior period.

Asset Impairments
For the nine months ended September 30, 2024, we recorded impairments totaling $10.0 million in our Midstream segment related to certain logistic assets.

Interest Income
Interest income was $59.0 million for the nine months ended September 30, 2024, compared to $62.1 million for the nine months ended September 30, 2023. The decrease in Interest income was primarily due to the decrease in average cash balance.

Interest Expense
Interest expense was $126.5 million for the nine months ended September 30, 2024, compared to $141.5 million for the nine months ended September 30, 2023. This decrease was primarily due to a reduction in total debt outstanding as compared to the prior period.

Gain on Foreign Currency Transactions
Remeasurement adjustments from the foreign currency conversion of the intercompany financing note payable by Petro-Canada Lubricants Inc. resulted in a net gain of $1.5 million and $2.5 million for the nine months ended September 30, 2024 and 2023, respectively. Utilized as an economic hedge to mitigate foreign currency exposure, the intercompany note is net of mark-to-market valuations on foreign exchange forward contracts. For the nine months ended September 30, 2024 and 2023, foreign currency transactions included a gain of $9.5 million and a gain of $1.6 million, respectively, on foreign exchange forward contracts.

Income Taxes
For the nine months ended September 30, 2024, we recorded Income tax expense of $52.2 million compared to $480.6 million for the nine months ended September 30, 2023. This decrease was principally due to lower pre-tax income during the nine months ended September 30, 2024, compared to the same period of 2023. Our effective tax rates were 11.6% and 21.6% for the nine months ended September 30, 2024 and 2023, respectively. The difference between the U.S. federal statutory rate and the effective tax rate for the nine months ended September 30, 2024 is primarily due to the relationship between pre-tax results and non-taxable permanent differences. The difference in the U.S. federal statutory rate and the effective tax rate for the nine months ended September 30, 2023 was primarily due to the impact of federal tax credits and the relationship between pre-tax results and the earnings attributable to the noncontrolling interest that is not included in income for tax purposes.


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LIQUIDITY AND CAPITAL RESOURCES

HF Sinclair and HEP Credit Agreements
We have a $1.65 billion senior unsecured revolving credit facility maturing in April 2026 (the “HF Sinclair Credit Agreement”). The HF Sinclair Credit Agreement may be used for revolving credit loans and letters of credit from time to time and is available to fund general corporate purposes. At September 30, 2024, we were in compliance with all covenants, had no outstanding borrowings and had outstanding letters of credit totaling $0.2 million under the HF Sinclair Credit Agreement.

Additionally, our wholly owned subsidiary, HEP, has a $1.2 billion senior secured revolving credit facility maturing in July 2025 (the “HEP Credit Agreement” and, together with the HF Sinclair Credit Agreement, the “Credit Agreements”). In connection with the consummation of the HEP Merger Transaction, we amended the HEP Credit Agreement to, among other things, (a) provide a guaranty from us and terminate all guaranties from subsidiaries of HEP, (b) amend the definition of “Investment Grade Rating” (as defined in the HEP Credit Agreement) to reference the credit rating of our senior unsecured indebtedness, (c) eliminate the requirement to deliver separate audited and unaudited financial statements for HEP and its subsidiaries and only provide certain segment-level reporting for HEP with any compliance certificate delivered in accordance with the HEP Credit Agreement and (d) amend certain covenants to eliminate certain restrictions on (i) amendments to intercompany contracts, (ii) transactions with us and our subsidiaries and (iii) investments in and contributions, dividends, transfers and distributions to us and our subsidiaries.

The HEP Credit Agreement is available to fund capital expenditures, investments, acquisitions, distribution payments, working capital and for general corporate purposes. It is also available to fund letters of credit up to a $50 million sub-limit and has an accordion feature that allows us to increase the commitments under the HEP Credit Agreement up to a maximum amount of $1.7 billion. At September 30, 2024, we were in compliance with all of its covenants, had outstanding borrowings of $350.0 million and no outstanding letters of credit under the HEP Credit Agreement.

Indebtedness under the Credit Agreements bears interest, at our option, for borrowings in U.S. dollars at either (a) a base rate equal to the sum of (1) the highest of (i) the prime rate (as publicly announced from time to time by the applicable administrative agent), (ii) the Federal Funds Effective Rate (as defined in the HF Sinclair Credit Agreement and as defined as the “Federal Funds Rate” in the HEP Credit Agreement) plus 0.5%, and (iii) Spread Adjusted Term SOFR (as defined in the HF Sinclair Credit Agreement and as defined as “Adjusted Term SOFR” in the HEP Credit Agreement) for a one-month interest period plus 1%, plus (2) an applicable margin for base rate loans ranging from 0.25% to 1.125%, or (b) the sum of (1) Spread Adjusted Term SOFR (as defined in the HF Sinclair Credit Agreement and as defined as “Adjusted Term SOFR” in the HEP Credit Agreement) for the applicable interest period, plus (2) an applicable margin for term SOFR loans ranging from 1.25% to 2.125%. The HF Sinclair Credit Agreement allows for borrowings in Sterling and Euros with similar interest rates. In each case and each Credit Agreement, the applicable margin is based on HF Sinclair’s debt rating assigned by Standard & Poor’s Rating Services and Moody’s Investors Service, Inc. The weighted average interest rate in effect under the HEP Credit Agreement on our borrowings was 6.58% as of September 30, 2024.

During the nine months ended September 30, 2024, we had net repayments of $105.5 million under the HEP Credit Agreement.

Restricted HF Sinclair Senior Notes Exchange
On December 4, 2023, we completed our offers to exchange any and all outstanding HEP 5.000% senior notes maturing February 2028 (the “HEP 5.000% Senior Notes”) and HEP 6.375% senior notes maturing April 2027 (the “HEP 6.375% Senior Notes” and, together with the HEP 5.000% Senior Notes, the “HEP Senior Notes”) for HF Sinclair 5.000% senior notes maturing February 2028 (the “HF Sinclair 5.000% Senior Notes”) and HF Sinclair 6.375% senior notes maturing April 2027 (the “HF Sinclair 6.375% Senior Notes” and, together with the HF Sinclair 5.000% Senior Notes, the “Restricted HF Sinclair Senior Notes”) to be issued by HF Sinclair with registration rights and cash. In connection with the exchange offers, we amended the indenture governing the HEP Senior Notes to eliminate (i) substantially all of the restrictive covenants, (ii) certain of the events which may lead to an “Event of Default,” (iii) the SEC reporting covenant and (iv) the requirement of HEP to offer to purchase the HEP Senior Notes upon a change of control. The Restricted HF Sinclair Senior Notes were issued in exchange for the HEP Senior Notes pursuant to a private exchange offer exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). This exchange was part of a broader corporate strategy, including the HEP Merger Transaction.

On May 10, 2024, HF Sinclair filed a registration statement, as amended, which was declared effective on August 5, 2024, to exchange the Restricted HF Sinclair Senior Notes for an equal principal amount of each respective series of the Restricted HF Sinclair Senior Notes (such notes offered in exchange, the “Registered HF Sinclair Senior Notes”). The Registered HF Sinclair Senior Notes are substantially identical to the Restricted HF Sinclair Senior Notes in all material respects except the Registered
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HF Sinclair Senior Notes are registered under the Securities Act and are not subject to restrictions on transfer or to any increase in annual interest rate for failure to comply with the Registration Rights Agreement, dated December 4, 2023, and do not have the registration rights applicable to the Restricted HF Sinclair Senior Notes. On September 5, 2024, HF Sinclair completed its offers to exchange the Restricted HF Sinclair Senior Notes for the Registered HF Sinclair Senior Notes.

The Registered HF Sinclair Senior Notes are unsecured and unsubordinated obligations of ours and rank equally with all our other existing and future unsecured and unsubordinated indebtedness. Each series of the Registered HF Sinclair Senior Notes has the same interest rate, interest payment dates, maturity date and redemption terms as the corresponding series of Restricted HF Sinclair Senior Notes.

HF Sinclair Financing Arrangements
Certain of our wholly owned subsidiaries entered into financing arrangements whereby such subsidiaries sold a portion of their precious metals catalyst to a financial institution in exchange for cash and then financed the use of the precious metals catalyst for a term not to exceed one year. The volume of the precious metals catalyst and the interest rate are fixed over the term of each agreement, and the payments are recorded as Interest expense. Upon maturity of the financing arrangement, we must either satisfy the obligation at fair market value or refinance to extend the maturity.

HF Sinclair may, from time to time, issue letters of credit pursuant to uncommitted letters of credit facilities with its lenders. At September 30, 2024, there were no letters of credit outstanding under such credit facilities.

See Note 11 “Debt” in the Notes to Consolidated Financial Statements for additional information on our debt instruments.

Liquidity
We believe our current Cash and cash equivalents, along with future internally generated cash flow and funds available under our credit facilities, will provide sufficient resources to fund currently planned capital projects and our liquidity needs for the foreseeable future. We expect that, to the extent necessary, we can raise additional funds from time to time through equity or debt financings in the public and private capital markets. Further, we may, from time to time, seek to retire some or all of our outstanding debt agreements through cash purchases, and/or exchanges, open market purchases, privately negotiated transactions, tender offers or otherwise. Such transactions, if any, may be material and will depend on prevailing market conditions, our liquidity requirements and other factors. In addition, components of our long-term growth strategy include the optimization of existing units at our facilities and the selective acquisition of complementary assets for our operations intended to increase earnings and cash flow. We also expect to use cash for payment of cash dividends, which are at the discretion of our Board of Directors, and for the repurchase of common stock under the May 2024 Share Repurchase Program.

Our liquidity was approximately $3.7 billion at September 30, 2024, consisting of Cash and cash equivalents of $1.2 billion, an undrawn $1.65 billion credit facility under the HF Sinclair Credit Agreement and $850.0 million remaining availability under the HEP Credit Agreement.

We consider all highly liquid instruments with a maturity of three months or less at the time of purchase to be cash equivalents. These primarily consist of investments in conservative, highly rated instruments issued by financial institutions, government and corporate entities with strong credit standings and money market funds. Cash equivalents are stated at cost, which approximates market value.

On May 7, 2024, our Board of Directors approved the May 2024 Share Repurchase Program, which replaced all existing share repurchase programs, including the approximately $214.2 million remaining under the share repurchase program approved by our Board of Directors in August 2023 (the “August 2023 Share Repurchase Program”). The May 2024 Share Repurchase Program authorizes us to repurchase common stock in the open market or through privately negotiated transactions. Privately negotiated repurchases from REH are also authorized under the May 2024 Share Repurchase Program, subject to REH’s interest in selling its shares and other limitations. The timing and amount of share repurchases, including those from REH, will depend on market conditions and corporate, tax, regulatory and other relevant considerations. In addition, we are authorized by our Board of Directors to repurchase shares in an amount sufficient to offset shares issued under our compensation programs. The May 2024 Share Repurchase Program may be discontinued at any time by our Board of Directors.
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During the nine months ended September 30, 2024, we made open market and privately negotiated purchases of 7,930,742 shares for $462.2 million under the August 2023 Share Repurchase Program, of which 6,516,326 shares were repurchased for $381.1 million pursuant to privately negotiated repurchases from REH Company. During the nine months ended September 30, 2024, we made open market and privately negotiated purchases of 4,013,435 shares for $201.5 million under the May 2024 Share Repurchase Program, of which 1,348,435 shares were repurchased for $75.0 million pursuant to privately negotiated repurchases from REH Company.

Cash Flows – Operating Activities

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Net cash flows provided by operating activities were $1,250.4 million for the nine months ended September 30, 2024, compared to $2,066.6 million for the nine months ended September 30, 2023, a decrease of $816.2 million primarily driven by a decrease in net income, partially offset by changes in working capital combined with lower turnaround spend during the nine months ended September 30, 2024. Changes in working capital increased operating cash flows by $545.1 million for the nine months ended September 30, 2024, and increased operating cash flows by $144.0 million for the nine months ended September 30, 2023. Additionally, for the nine months ended September 30, 2024, Turnaround expenditures were $258.8 million compared to $471.1 million for the nine months ended September 30, 2023.

Cash Flows – Investing Activities and Planned Capital Expenditures

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
For the nine months ended September 30, 2024, our Net cash flows used for investing activities were $294.6 million. Cash expenditures for Properties, plants and equipment for the nine months ended September 30, 2024, were $296.9 million.

For the nine months ended September 30, 2023, our Net cash flows used for investing activities were $247.7 million. Cash expenditures for Properties, plants and equipment for the nine months ended September 30, 2023, were $261.4 million.

Each year, our Board of Directors approves our annual capital budget, which includes specific projects that management is authorized to undertake. When conditions warrant or as new opportunities arise, additional projects may be approved. The funds appropriated for a particular capital project may be expended over a period of several years, depending on the time required to complete the project. Therefore, our planned capital expenditures for a given year consist of expenditures appropriated in that year’s capital budget plus expenditures for projects appropriated in prior years that have not yet been completed. Refinery turnaround spending is amortized over the useful life of the turnaround.

The refining industry is capital-intensive and requires ongoing investments to sustain our refining operations. This includes the replacement of, or rebuilding, refinery units and components that extend their useful life. We also invest in projects that improve operational reliability and profitability via enhancements that improve refinery processing capabilities as well as production yield and flexibility. Our capital expenditures also include projects related to renewable diesel, environmental, health and safety compliance and include initiatives as a result of federal and state mandates.

Our refinery operations and related emissions are highly regulated at both federal and state levels, and we invest in our facilities as needed to remain in compliance with these standards. Additionally, when faced with new emissions or fuel standards, we seek to execute projects that facilitate compliance and also improve the operating costs and/or yields of associated refining processes.

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Expected capital and turnaround cash spending for 2024 is as follows:
Expected Cash Spending
(In millions)
HF Sinclair Capital Expenditures
Refining$235.0 
Renewables5.0 
Lubricants & Specialties40.0 
Marketing10.0 
Midstream30.0 
Corporate65.0 
Turnarounds and catalyst415.0 
Total sustaining$800.0 
Growth capital75.0 
Total$875.0 

Cash Flows – Financing Activities

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
For the nine months ended September 30, 2024, our Net cash flows used for financing activities were $1,078.7 million. During the nine months ended September 30, 2024, we repurchased $667.3 million of our Common stock, paid $290.5 million in Dividends and had net repayments of $105.5 million under the HEP Credit Agreement.

For the nine months ended September 30, 2023, our Net cash flows used for financing activities were $1,268.3 million. During the nine months ended September 30, 2023, we repurchased $833.6 million of our Common stock, paid $258.9 million in Dividends and had net repayments of $89.5 million under the HEP Credit Agreement.

Contractual Obligations and Commitments

During the nine months ended September 30, 2024, we had net repayments of $105.5 million, resulting in $350.0 million of outstanding borrowings under the HEP Credit Agreement.

There were no other significant changes to our long-term contractual obligations during this period.

CRITICAL ACCOUNTING ESTIMATES

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities as of the date of the financial statements. Actual results may differ from these estimates under different assumptions or conditions.

Our significant accounting policies are described in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2023. Certain critical accounting policies that materially affect the amounts recorded in our consolidated financial statements include assessing the possible impairment of certain Assets and Goodwill and assessing contingent liabilities for probable losses.

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Goodwill and Asset Impairments
As of September 30, 2024, our Goodwill balance was $3.0 billion, with goodwill assigned to our Refining, Renewables, Marketing, Lubricants & Specialties and Midstream segments. Goodwill represents the excess of the cost of an acquired entity over the fair value of the assets acquired and liabilities assumed. Goodwill is not subject to amortization and is tested annually or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Our goodwill impairment testing first entails either a quantitative assessment or an optional qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If we determine that based on the qualitative factors that it is more likely than not that the carrying value of the reporting unit is greater than its fair value, a quantitative test is performed in which we estimate the fair value of the related reporting unit. If the carrying amount of a reporting unit exceeds its fair value, the goodwill of that reporting unit is impaired, and we measure goodwill impairment as the excess of the carrying amount of reporting unit over the related fair value.

We performed our annual goodwill impairment testing quantitatively as of July 1, 2024, and determined there was no impairment of goodwill attributable to our reporting units. The estimated fair values of our reporting units were derived using a combination of income and market approaches. The income approach reflects expected future cash flows based on estimated forecasted production levels, selling prices, gross margins, operating costs and capital expenditures. Our market approaches include both the guideline public company and guideline transaction methods. Both methods utilize pricing multiples derived from historical market transactions and other market data of other like-kind assets. The fair values of the reporting units over their respective carrying values exceeded 10%. Increasing the discount rate by 1.0% or reducing the terminal cash flow growth rate by 1.0% would not have changed the results of our annual goodwill testing.

In performing our impairment test of goodwill, we developed cash flow forecasts for each of our reporting units. Significant judgment is involved in performing these fair value estimates since the results are based on forecasted financial information. The cash flow forecasts include significant assumptions such as planned utilization, end-user demand, selling prices, gross margins, operating costs and capital expenditures. Other key assumptions applied to these forecasts to determine the fair value of a reporting unit are the discount rate and terminal cash flow growth rate. The discount rate is intended to reflect the weighted average cost of capital for a market participant and the risks associated with the realization of the estimated future cash flows. Our fair value estimates are based on projected cash flows, which we believe to be reasonable.

We continually monitor and evaluate various factors for potential indicators of goodwill and asset impairments. A reasonable expectation exists that further deterioration in our operating results or overall economic conditions could lead to goodwill and / or asset impairments at some point in the future. Future impairment charges could be material to our results of operations and financial condition.

Contingencies
We are subject to proceedings, lawsuits and other claims related to environmental, labor, product and other matters. We are required to assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of probable losses. A determination of the amount of reserves required, if any, for these contingencies is made after careful analysis of each individual issue. The required reserves may change in the future due to new developments in each matter or changes in approach, such as a change in settlement strategy when dealing with these matters.

RISK MANAGEMENT

We use certain strategies to reduce some commodity price and operational risks. We do not attempt to eliminate all market risk exposures when we believe that the exposure relating to such risk would not be significant to our future earnings, financial position, capital resources or liquidity or that the cost of eliminating the exposure would outweigh the benefit.

Commodity Price Risk Management
Our primary market risk is commodity price risk. We are exposed to market risks related to the volatility in crude oil and refined products, as well as volatility in the price of natural gas used in our refining operations. We periodically enter into derivative contracts in the form of commodity price swaps, collar contracts, forward purchase and sales and futures contracts to mitigate price exposure with respect to our inventory positions, natural gas purchases, sales prices of refined products and crude oil costs.

Foreign Currency Risk Management
We are exposed to market risk related to the volatility in foreign currency exchange rates. We periodically enter into derivative contracts in the form of foreign exchange forward contracts to mitigate the exposure associated with fluctuations on intercompany notes with our foreign subsidiaries that are not denominated in the U.S. dollar.
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As of September 30, 2024, we have the following notional contract volumes related to all outstanding derivative instruments used to mitigate commodity price and foreign currency risk:
Notional Contract Volumes
by Year of Maturity
Derivative InstrumentTotal Outstanding Notional20242025Unit of Measure
NYMEX futures (WTI) - short1,400,000 1,400,000 — Barrels
Forward gasoline and diesel contracts - long60,000 60,000 — Barrels
Foreign currency forward contracts383,114,375 102,186,063 280,928,312 U.S. dollar
Forward commodity contracts (platinum) (1)
34,628 2,047 32,581 Troy ounces
Natural gas price swaps (basis spread) - long1,104,000 1,104,000 — MMBTU
(1)Represents an embedded derivative within our precious metals catalyst financing arrangements, which may be refinanced or require repayment under certain conditions. See Note 11 “Debt” in the Notes to Consolidated Financial Statements for additional information on these financing arrangements.

The following sensitivity analysis provides the hypothetical effects of market price fluctuations to the commodity hedged under our derivative contracts:
Derivative Fair Value Gain (Loss) at September 30,
20242023
(In thousands)
10% increase in underlying commodity prices$(9,649)$(10,387)
10% decrease in underlying commodity prices$9,649 $10,178 

Interest Rate Risk Management

The market risk inherent in our fixed-rate debt is the potential change arising from increases or decreases in interest rates, as discussed below.

For the fixed rate HF Sinclair Senior Notes, HollyFrontier Senior Notes and HEP Senior Notes (each as set forth in Note 11 “Debt” in the Notes to Consolidated Financial Statements), changes in interest rates will generally affect the fair value of the debt, but not earnings or cash flows. The outstanding principal, estimated fair value and estimated change in fair value (assuming a hypothetical 10% change in the yield-to-maturity rates) for this debt as of September 30, 2024, is presented below:
Outstanding
Principal		Estimated
Fair Value
Estimated Change in Fair Value
 (In thousands)
HollyFrontier Corporation, HF Sinclair and HEP Senior Notes$2,300,000 $2,310,949 $30,216 

For the variable rate HF Sinclair Credit Agreement and HEP Credit Agreement, changes in interest rates would affect cash flows, but not the fair value. At September 30, 2024, outstanding borrowings under the HEP Credit Agreement were $350.0 million, and no borrowings were outstanding under the HF Sinclair Credit Agreement. A hypothetical 10% change in interest rates applicable to the HEP Credit Agreement would not materially affect cash flows.

Our operations are subject to catastrophic losses, operational hazards and unforeseen interruptions, including but not limited to fire, explosion, releases or spills, cyberattacks, weather-related perils, vandalism, power failures, mechanical failures and other events beyond our control. We maintain various insurance coverages, including general liability, property damage, business interruption and cyber insurance, which are subject to certain deductibles and insurance policy terms and conditions. We are not fully insured against certain risks because such risks are not fully insurable, coverage is unavailable, or premium costs, in our judgment, do not justify such expenditures.

Financial information is reviewed on the counterparties in order to review and monitor their financial stability and assess their ongoing ability to honor their commitments under the derivative contracts. We have not experienced, nor do we expect to experience, any difficulty in the counterparties honoring their commitments.

We have a risk management oversight committee consisting of members from our senior management. This committee oversees our risk enterprise program, monitors our risk environment and provides direction for activities to mitigate identified risks that may adversely affect the achievement of our goals.
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Item 3.Quantitative and Qualitative Disclosures About Market Risk

See “Risk Management” under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”


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Reconciliations to Amounts Reported Under Generally Accepted Accounting Principles

Reconciliations of earnings before interest, taxes, depreciation and amortization (“EBITDA”) to amounts reported under generally accepted accounting principles in financial statements.

Earnings before interest, taxes, depreciation and amortization, which we refer to as EBITDA, is calculated as Net income (loss) attributable to HF Sinclair stockholders plus (i) Interest expense, net of Interest income, (ii) Income tax expense (benefit), and (iii) Depreciation and amortization. EBITDA is not a calculation provided for under GAAP; however, the amounts included in the EBITDA calculation are derived from amounts included in our consolidated financial statements. EBITDA should not be considered as an alternative to Net income (loss) or Income (loss) from operations as an indication of our operating performance or as an alternative to operating cash flow as a measure of liquidity. EBITDA is not necessarily comparable to similarly titled measures of other companies. EBITDA is presented here because it is a widely used financial indicator used by investors and analysts to measure performance. EBITDA is also used by our management for internal analysis and as a basis for financial covenants.

Below is our calculation of EBITDA:
 Three Months Ended September 30,Nine Months Ended September 30,
 2024202320242023
 (In thousands)
Net income (loss) attributable to HF Sinclair stockholders$(75,944)$790,922 $390,508 $1,651,849 
Add interest expense40,396 48,686 126,536 141,490 
Subtract interest income(18,309)(24,577)(58,983)(62,103)
Add income tax expense (benefit)(57,266)235,015 52,190 480,640 
Add depreciation and amortization209,716 195,562 613,765 558,905 
EBITDA$98,593 $1,245,608 $1,124,016 $2,770,781 

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Reconciliations of refinery operating information (non-GAAP performance measures) to amounts reported under generally accepted accounting principles in financial statements.

Adjusted refinery gross margin is a non-GAAP performance measure that is used by our management and others to compare our refining performance to that of other companies in our industry. We believe this margin measure is helpful to investors in evaluating our refining performance on a relative and absolute basis, including against publicly available crack spread data. Adjusted refinery gross margin per produced barrel sold is total Refining segment gross margin plus Lower of cost or market inventory valuation adjustments, Depreciation and amortization and Operating expenses, divided by sales volumes of produced refined products sold. This margin measure does not include the non-cash effects of Lower of cost or market inventory valuation adjustments, which relate to volumes in inventory at the end of the period. Adjusted refinery gross margin is not a calculation provided for under GAAP and should not be considered in isolation or as a substitute for Refining segment gross margin. The GAAP measure most directly comparable to adjusted refinery gross margin is Refining segment gross margin. Other companies in our industry may not calculate these performance measures in the same manner. Due to rounding of reported numbers, some amounts may not calculate exactly.

Reconciliation of Refining segment gross margin to adjusted refinery gross margin to adjusted refinery gross margin per produced barrel sold and adjusted refinery gross margin, less operating expenses per produced barrel sold

 Three Months Ended September 30,Nine Months Ended September 30,
 2024202320242023
 (In thousands, except per barrel amounts)
Refining segment
Sales and other revenues$6,381,711 $8,050,934 $19,563,765 $21,808,931 
Cost of sales (1)
6,415,813 6,970,407 18,881,989 19,394,036 
Depreciation and amortization123,348 118,077 362,933 330,702 
Gross margin(157,450)962,450 318,843 2,084,193 
Add lower of cost or market inventory adjustments198,759 (26,842)(21,799)— 
Add operating expenses485,231 478,847 1,406,414 1,391,930 
Add depreciation and amortization123,348 118,077 362,933 330,702 
Adjusted refinery gross margin$649,888 $1,532,532 $2,066,391 $3,806,825 
Produced barrels sold (BPD) (2)
654,400634,180650,720583,210
Average per produced barrel sold:
Gross margin$(2.62)$16.50 $1.79 $13.09 
Add lower of cost or market inventory adjustments3.30 (0.46)(0.12)— 
Add operating expenses8.06 8.21 7.89 8.74 
Add depreciation and amortization2.05 2.02 2.03 2.08 
Adjusted refinery gross margin$10.79 $26.27 $11.59 $23.91 
Less operating expenses8.06 8.21 7.89 8.74 
Adjusted refinery gross margin, less operating expenses$2.73 $18.06 $3.70 $15.17 

(1)Exclusive of Depreciation and amortization.
(2)    Represents the number of produced barrels sold per calendar day in the period.

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Reconciliation of renewables operating information (non-GAAP performance measures) to amounts reported under generally accepted accounting principles in financial statements.

Adjusted renewables gross margin is a non-GAAP performance measure that is used by our management and others to compare our renewables performance to that of other companies in our industry. We believe this margin measure is helpful to investors in evaluating our renewables performance on a relative and absolute basis. Adjusted renewables gross margin per produced gallon sold is total Renewables segment gross margin plus Lower of cost or market inventory valuation adjustments, Depreciation and amortization and Operating expenses, divided by sales volumes of produced renewables products sold. This margin measure does not include the non-cash effects of Lower of cost or market inventory valuation adjustments, which relate to volumes in inventory at the end of the period. Adjusted renewables gross margin is not a calculation provided for under GAAP and should not be considered in isolation or as a substitute for Renewables segment gross margin. The GAAP measure most directly comparable to adjusted renewables gross margin is Renewables segment gross margin. Other companies in our industry may not calculate these performance measures in the same manner. Due to rounding of reported numbers, some amounts may not calculate exactly.

Reconciliation of Renewables segment gross margin to adjusted renewables gross margin to adjusted renewables gross margin per produced gallon sold and adjusted renewables gross margin, less operating expenses per produced gallon sold

Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
(In thousands, except per gallon amounts)
Renewables segment
Sales and other revenues$265,358 $331,177 $753,195 $902,378 
Cost of sales (1)
265,828 307,874 765,388 898,054 
Depreciation and amortization21,409 18,904 61,467 57,846 
Gross margin(21,879)4,399 (73,660)(53,522)
Add lower of cost or market inventory adjustments3,548 (17,006)1,613 (4,114)
Add operating expenses24,959 30,198 76,125 85,942 
Add depreciation and amortization21,409 18,904 61,467 57,846 
Adjusted renewables gross margin$28,037 $36,495 $65,545 $86,152 
Produced gallons sold
68,755 54,909 193,484 152,896 
Average per produced gallon sold:
Gross margin$(0.32)$0.08 $(0.38)$(0.35)
Add lower of cost or market inventory adjustments0.05 (0.31)0.01 (0.03)
Add operating expenses0.36 0.55 0.39 0.56 
Add depreciation and amortization0.32 0.34 0.32 0.38 
Adjusted renewables gross margin$0.41 $0.66 $0.34 $0.56 
Less operating expenses0.36 0.55 0.39 0.56 
Adjusted renewables gross margin, less operating expenses$0.05 $0.11 $(0.05)$— 

(1) Exclusive of Depreciation and amortization.












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Reconciliation of marketing operating information (non-GAAP performance measures) to amounts reported under generally accepted accounting principles in financial statements.

Adjusted marketing gross margin is a non-GAAP performance measure that is used by our management and others to compare our marketing performance to that of other companies in our industry. We believe this margin measure is helpful to investors in evaluating our marketing performance on a relative and absolute basis. Adjusted marketing gross margin per gallon sold is total Marketing segment gross margin plus Depreciation and amortization, divided by sales volumes of marketing products sold. Adjusted marketing gross margin is not a calculation provided for under GAAP and should not be considered in isolation or as a substitute for Marketing segment gross margin. The GAAP measure most directly comparable to adjusted marketing gross margin is Marketing segment gross margin. Other companies in our industry may not calculate these performance measures in the same manner. Due to rounding of reported numbers, some amounts may not calculate exactly.

Reconciliation of Marketing segment gross margin to adjusted marketing gross margin to adjusted marketing gross margin per gallon sold

Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
(In thousands, except per gallon amounts)
Marketing segment
Sales and other revenues$950,050 $1,259,205 $2,668,219 $3,237,523 
Cost of sales (1)
918,432 1,230,372 2,590,573 3,162,727 
Depreciation and amortization6,588 6,002 19,265 17,889 
Gross margin25,030 22,831 58,381 56,907 
Add depreciation and amortization6,588 6,002 19,265 17,889 
Adjusted marketing gross margin$31,618 $28,833 $77,646 $74,796 
Sales volumes
365,036 398,399 1,043,183 1,091,216 
Average per gallon sold:
Gross margin$0.07 $0.06 $0.06 $0.05 
Add depreciation and amortization0.02 0.01 0.01 0.02 
Adjusted marketing gross margin$0.09 $0.07 $0.07 $0.07 

(1) Exclusive of Depreciation and amortization.
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Item 4.Controls and Procedures

Evaluation of disclosure controls and procedures. Our principal executive officer and principal financial officer have evaluated, as required by Rule 13a-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”), our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Exchange Act as of the end of the period covered by this Quarterly Report on Form 10-Q. Our disclosure controls and procedures are designed to provide reasonable assurance that the information we are required to disclose in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Based upon the evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2024.

Changes in internal control over financial reporting. There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during our last fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

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PART II. OTHER INFORMATION
 
Item 1.Legal Proceedings

Commitment and Contingency Reserves

In the ordinary course of business, we may become party to legal, regulatory or administrative proceedings or governmental investigations, including environmental and other matters. Damages or penalties may be sought from us in some matters and certain matters may require years to resolve. While the outcome and impact of these proceedings and investigations on us cannot be predicted with certainty, based on advice of counsel and information currently available to us, management believes that the resolution of these proceedings and investigations through settlement or adverse judgment will not either individually or in the aggregate have a material adverse effect on our financial condition, results of operations or cash flows.

The environmental proceedings are reported to comply with SEC regulations which require us to disclose proceedings arising under provisions regulating the discharge of materials into the environment or protecting the environment when a governmental authority is party to the proceedings and such proceedings involve potential monetary sanctions that we reasonably believe could exceed $300,000 or more.

Environmental Matters

Navajo
HF Sinclair Navajo Refining LLC (“HFS Navajo”) has been engaged in discussions with, and has responded to document requests from, the EPA, the United States Department of Justice (the “DOJ”) and the New Mexico Environment Department (the “NMED”) (collectively, the “Navajo Matter Government Agencies”) regarding HFS Navajo’s compliance with the Clean Air Act (“CAA”) and underlying regulations, and similar New Mexico laws and regulations, at its Artesia and Lovington, New Mexico refineries. The discussions have included the following topics: (a) alleged noncompliance with CAA’s National Emission Standards for Hazardous Air Pollutants (“NESHAP”) and New Source Performance Standards (“NSPS”) at the Artesia refinery, which were set forth in a Notice of Violation (“May 2020 NOV”) issued by the EPA in May 2020; (b) a Post Inspection Notice issued in June 2020 by the NMED, alleging noncompliance issues similar to those alleged by the EPA in its May 2020 NOV as well as alleged noncompliance with the State Implementation Plan (“SIP”) and the Title V permit operating programs; (c) an information request issued in September 2020 by the EPA, pursuant to CAA Section 114, related to benzene fenceline monitoring, flare fuel gas, leak detection and repair, storage vessels and tanks, and other information regarding the Artesia refinery; (d) an information request issued by the EPA in May 2021, pursuant to CAA Section 114, requesting additional information and testing related to certain tanks at the Artesia refinery; and (e) informal information requests related to, among other things, the Artesia refinery’s wastewater treatment plant, oil water separators and heat exchangers. In each of April 2022, June 2023 and August 2023, the EPA alleged additional CAA noncompliance at the Artesia refinery beyond the allegations in the May 2020 NOV, including alleged noncompliance with NESHAP, NSPS, SIP, Title V and other requirements.

Beginning in the spring of 2021, HFS Navajo and the Navajo Matter Government Agencies began monthly meetings to discuss potential injunctive relief measures to address the alleged noncompliance at the Artesia refinery. In September 2021 and August 2023, the EPA presented to HFS Navajo potential claims for alleged noncompliance with a 2002 consent decree. In September 2024, the Navajo Matter Government Agencies presented to HFS Navajo a proposed penalty demand for the alleged noncompliance at the Artesia refinery. HFS Navajo continues to assess the factual basis for the alleged noncompliance and the proposed penalty demand and continues to engage in work with the Navajo Matter Government Agencies to resolve these issues.

It is too early to predict the outcome of this matter or the timing of resolution. We are unable to estimate the costs we may incur, if any, at this time.

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Puget Sound
HF Sinclair Puget Sound Refining LLC (“HFS Puget Sound”) has been engaged in discussions with, and has responded to document requests from, the Northwest Clean Air Agency (“NWCAA”), the EPA and the DOJ (collectively, the “PSR Matter Government Agencies”) regarding HFS Puget Sound’s compliance with the CAA, Emergency Planning and Community Right-to-Know Act (“EPCRA”) and related regulations, and similar Washington laws and regulations, at its Puget Sound Refinery. HFS Puget Sound acquired the Puget Sound Refinery from Equilon Enterprises LLC dba Shell Oil Products US (“SOPUS”) on November 1, 2021. The discussions with the PSR Matter Government Agencies have included the following topics: (a) an information request issued in March 2022 by the EPA, pursuant to CAA Section 114, covering periods of ownership of the Puget Sound Refinery by both HFS Puget Sound and SOPUS; (b) a Notice of Violation issued by the EPA to SOPUS and HFS Puget Sound on September 29, 2023, alleging violations of the CAA, EPCRA and the Pollution Prevention Act; and (c) the PSR Matter Government Agencies’ potential injunctive relief demands presented to SOPUS and HFS Puget Sound on June 28 and July 15, 2024, covering various process units at Puget Sound Refinery to address the alleged noncompliance. HFS Puget Sound believes that it is entitled to indemnification for certain of the matters described above.

HFS Puget Sound continues to work with the PSR Matter Government Agencies to resolve these issues.

At this time, no penalties have been demanded, and it is too early to predict the outcome of this matter.

Renewable Fuel Standard

On April 7, 2022, the EPA issued a decision reversing the grant of small refinery exemptions for our Woods Cross and Cheyenne refineries for the 2018 compliance year. On June 3, 2022, the EPA issued a decision reversing the grant of small refinery exemptions for our Woods Cross and Cheyenne refineries for the 2016 compliance year and denying small refinery exemption petitions for our Woods Cross and Cheyenne refineries for the 2019 and 2020 compliance years.

Certain of our subsidiaries pursued legal challenges to the EPA’s decisions to deny small refinery exemptions for the 2016, 2018, 2019 and 2020 compliance years. The first lawsuit, filed against the EPA on May 6, 2022, before the U.S. Court of Appeals for the DC Circuit (the “DC Circuit”), sought to have the EPA’s reversal of our 2018 small refinery exemption petitions overturned. The second lawsuit, filed against the EPA on August 5, 2022, before the U.S. Court of Appeals for the DC Circuit, sought to have the EPA’s reversal of our 2016 small refinery exemption petitions overturned and to have the EPA’s denial of our 2019 and 2020 small refinery exemption petitions reversed.

In addition, for both the 2016 and 2018 compliance years, pursuant to the June 2022 and April 2022 decisions, respectively, the EPA established an alternative compliance demonstration for small refineries pursuant to which the EPA is not imposing any obligations for the small refineries whose exemptions were reversed. On June 24, 2022, Growth Energy filed two lawsuits in the DC Circuit against the EPA challenging the alternative compliance demonstration for the 2016 and 2018 compliance years. On July 25, 2022, certain of our subsidiaries intervened on behalf of the EPA to aid the defense of the EPA’s alternative compliance demonstration decision.

On July 26, 2024, the DC Circuit issued a favorable decision vacating the EPA’s denial of all of our small refinery exemption petitions, finding the denial to be unlawful. The DC Circuit remanded the small refinery exemption petitions to the EPA for new determination. The DC Circuit also upheld the alternative compliance demonstration and denied Growth Energy’s challenge.

It is too early to determine the final impact of the DC Circuit’s decisions.

Other

We are a party to various other litigation and proceedings that we believe, based on the advice of counsel, will not either individually or in the aggregate have a materially adverse impact on our financial condition, results of operations or cash flows.

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Item 1A.Risk Factors
There have been no material changes in our risk factors as previously disclosed in Part I, “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. You should carefully consider the risk factors discussed in our 2023 Form 10-K, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

(c) Common Stock Repurchases Made in the Quarter

The following table discloses purchases of shares of our Common stock made by us during the third quarter of 2024:

PeriodTotal Number of
Shares Purchased		Average Price
Paid per Share		Total Number 
of Shares Purchased as
Part of Publicly Announced Plans or Programs
Maximum Dollar Value
of Shares that May Yet
Be Purchased Under the
Plans or Programs (1)
July 2024— $— — $925,000,045 
August 20242,040,000 $47.64 2,040,000 $827,822,416 
September 2024625,000 $46.84 625,000 $798,544,362 
Total for July to September 20242,665,000 2,665,000 
(1)In May 2024, our Board of Directors approved a $1.0 billion share repurchase program (the “May 2024 Share Repurchase Program”), which replaced approximately $214.2 million remaining authorization under the share repurchase program approved by our Board of Directors in August 2023. The May 2024 Share Repurchase Program authorized us to repurchase common stock in the open market or through privately negotiated transactions. Privately negotiated repurchases from REH Company (and together with its affiliate REH Advisors Inc., “REH”) were also authorized under this share repurchase program, subject to REH’s interest in selling its shares and other limitations. As of September 30, 2024, we had remaining authorization to repurchase up to $798.5 million under the May 2024 Share Repurchase Program.


Item 5. Other Information

None.

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Item 6.Exhibits


Exhibit NumberDescription
3.1
3.2
31.1*
31.2*
32.1**
32.2**
101++
The following financial information from HF Sinclair Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, formatted as inline XBRL (Inline Extensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Cash Flows, and (v) Notes to the Consolidated Financial Statements. The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
104++Cover page Interactive Data File (formatted as inline XBRL and contained in exhibit 101).

* Filed herewith.
** Furnished herewith.
++ Filed electronically herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
HF SINCLAIR CORPORATION
(Registrant)
Date: October 31, 2024/s/ Atanas H. Atanasov
Atanas H. Atanasov
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Date: October 31, 2024/s/ Vivek Garg
Vivek Garg
Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer)
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