PBF Energy posted a solid performance in the first quarter, despite narrowing crude oil price differentials, renewable fuel costs and an outage at a profitable Ohio refinery.
PBF, headquartered in northern New Jersey, owns the Delaware City Refinery and operates another refinery in Paulsboro, N.J.
PBF reported first quarter 2013 operating income totaled $100.1 million versus an operating loss of $164.1 million for the first quarter of 2012. Net income for the first quarter 2013 was $46.7 million, compared to a loss of $122.6 million for the first quarter 2012.
Production for the quarter averaged approximately 441,600 barrels per day. Production in the Mid-continent averaged approximately 122,700 barrels per day and on the East Coast 318,900 barrels per day. Results were adversely affected by the unplanned 18-day outage at the Toledo refinery.
For the first quarter 2013, the company’s gross refining margin averaged $9.13 per barrel of throughput, with the Mid-continent contributing $19.50 per barrel and the East Coast contributing $5.14 per barrel. Operating expenses on a company-wide basis were $5.19 per barrel, with the Mid-continent at $5.97 per barrel and the East Coast at $4.89 per barrel.
Tom Nimbley, PBF Energy’s CEO, said, “PBF faced some challenges during the quarter, including the outage at Toledo, narrowing crude oil differentials and increasing costs of compliance with the Renewable Fuels Standard. Despite these headwinds, we continue to believe in our strategy of sourcing the lowest cost feedstocks for our refineries and positioning PBF to benefit from positive market conditions.”
PBF has been profiting by using cheaper crude oil from North Dakota and Canada.
The company’s 70,000 barrel per day double-loop track at Delaware City continues to operate better than originally planned. The ongoing expansion project to double the company’s heavy crude unloading capability to 80,000 barrels per day is expected to be completed during the fourth quarter of this year.
Upon completion, PBF Energy will be able to deliver more than 150,000 barrels per day of crude-by-rail directly into the Delaware City refinery. During the first quarter 2013, the company ran approximately 55,000 barrels per day of the cheaper -crudes though its East Coast system and expects to add to this throughput in the second quarter as it increases deliveries of crude by rail and experiences a full quarter of operations of the double-loop track.
PBF Energy has entered into several agreements focused on advancing its crude-by-rail program. The company has signed long-term agreements with BNSF Railway and Norfolk Southern for rail services as PBF seeks to move increased volumes of North American crude across the rail system.
PBF has also reached an agreement to transport Bakken crude oil from a North Dakota facility for delivery to PBF’s East Coast refineries. PBF Energy has also signed a new agreement with Trinity for the acquisition of 1,000 additional coiled and insulated railcars. This brings the total expected number of PBF’s railcars to 5,900, including 4,600 coiled and insulated cars. The railcars are scheduled to be delivered over the next eight to ten quarters.
“We continue to invest in our organic rail infrastructure and enter into beneficial commercial arrangements in order to increase our ability to access cost-advantaged North American crude oils,” said Nimbley. “With our recently announced supply agreement for Bakken crude oil with Continental Resources and our arrangements with the rail companies, PBF has effectively established a rail pipeline for crude direct from the producers to our refineries on the East Coast. We believe that by providing our refineries with the most economic crude slates, we will maximize the earnings potential of our assets.”
The company also announced it will pay a quarterly dividend of $0.30 per share.
