Shares in refiner PBF surge after strong earnings report

New tanker cars at the unloading area near the Delaware City Refinery.
New tanker cars at the unloading area near the Delaware City Refinery.

Shares of the owner of the Delaware City Refinery  surged  after  its first earnings report as a publicly traded company. The price of PBF Energy shares  settled back to $39.33 on Monday, but moved up to $40 on Tuesday.

PBF  posted fourth quarter operating income of $284.9 million compared to an operating loss of $165.6 million during the same period a year earlier.

Revenue  for the year was $20.1 billion compared to $14 billion a year ago.  Revenue in the fourth quarter was $4.95 billion, compared to $4.8  billion a year earlier.

The results led PBF board to increase its dividend above the estimate used in its stock offering materials.

Stock in the company has traded at between $26 and $40 a share since it went public a few months ago.

New Jersey-based PBF owns the Delaware City Refinery, the focal point of the company’s efforts to process crude oil brought in by rail from North Dakota and Canada.  Delaware City  has traditionally relied on tanker shipments from overseas. PBF says the rail shipments from an area where crude oil sells at a discount give PBF a cost advantage, even with added costs.

Analysts have questioned whether the strategy  will work over the long term as new pipelines go into operation, but were reportedly more upbeat after the release of the earnings report.

Adjusted net  income for the fourth quarter $165.7 million compared to a loss of $111.7 million for the fourth quarter 2011. The results reflect the conversion of securities into PBF common stock.For the year, operating income was $920.4 million, compared to $305.7 million for the same period in 2011. Adjusted net income for the year was $492.5 million compared to $146.9 million for the corresponding period in 2011.

PBF Energy’s full-year results include a full year of operations of the company’s refineries compared to 2011, which had 12 months of operations of the Paulsboro refinery, ten months of operations of the Toledo refinery and activities to reconfigure and restart the Delaware City refinery.

Delaware City went into full operation in the fall of 2011 after a lengthy start-up process that was partially the result of a full shutdown by former owner Valero. PBF bought its first refinery with the help of a financial package that included participation by the State of Delaware.

Tom Nimbley, PBF Energy’s CEO, said, “PBF’s fourth quarter and full year results are reflective of our commitment to safety and our ability to run our refineries reliably and efficiently. During the fourth quarter, we were able to take advantage of positive market conditions and, importantly, we began to realize the initial benefits of our crude-by-rail strategy at our east coast refineries.”

The company’s 70,000 barrel per day track at Delaware City is now in full operation. Initial discharge rates indicate that this facility is capable of operating above its capacity of 70,000 barrels per day, a press release stated.

The board approved the recently announced expansion project to double the company’s heavy crude unloading capability to 80,000 barrels per day by the fourth quarter of this year. Upon completion, PBF Energy will be able to deliver more than 150,000 barrels per day of crude oil directly into the Delaware City refinery via rail.

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