PBF reports strong earnings from cheaper rail-delivered crude oil

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pbfPBF Energy rode the rails to strong earnings in the first quarter.

The owner of the three refineries, including the Delaware City Refinery, posted operating  income of $260 million, compared to $100 million during the same period a year ago. Net income was $140.7 million, compared to $46.7 million during the same period in 2013.

The company reported that the results came despite the fact that production was below estimates, due to cold winter weather. The weather, at one point,  led to a freeze-related shutdown at its Paulsboro, N.J. Refinery. The weather also hampered rail shipments.

During the first quarter 2014, the company ran approximately 102,400 barrels per day of rail-delivered crudes through its East Coast refineries, of which 40,100 barrels per day were heavy crude oil. The oil coming from railroad tankers primarily goes to the Delaware City Refinery and its unloading site.

The oil comes from North Dakota and Canada, where there is not sufficient pipeline capacity. The company is expanding its existing rail capacity of approximately 145,000 barrels per day to a total of 210,000 barrels a  day and expects this increased capacity to be in service by the end of the third quarter.

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The amount of rail traffic to and from the refinery has led to safety concerns. The rail route passes through portions of the Newark and Bear-Glasgow areas on its way to Delaware City. No mishaps have been reported.

Tom Nimbley, PBF Energy’s CEO, said the lower prices paid for the North Dakota and Canadian crude and relatively stable operations contributed to the higher earnings. The company also saw savings in crude oil that was brought in via water.

Nimbley says the price gaps that aided PBF may get smaller in the second quarter. However, the company still expects stronger results.

Total revenue of $4.7 billion for the quarter was largely unchanged from a year earlier.

PBF is spinning off its logistics operations that include rail cars into a separate company. PBF is headquartered in northern New Jersey. The company also declared a 30-cent-a-sure dividend for stockholders.

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