Delaware City refinery owner PBF Energy Inc. reported higher earnings in the second quarter as it makes plans to acquire a refinery near New Orleans.
Adjusted net income for the second quarter was $80.5 compared to $34.2 million during the same period a year ago. That was slightly below consensus earnings forecasts.
The company is seeing challenges to profit margins from rail transport and is now bringing in more crude oil via barge and ship.
PBF Energy’s financial results reflect the consolidation of the financial results of PBF Logistics LP, a master limited partnership of which PBF indirectly owns the general partner and approximately 53.8 percent of the limited partner interests.
The company recently completed the spin-off of rail unloading and other logistics assets at the Delaware City Refinery to the partnership . PBF is based in northern New Jersey.
Tom Nimbley, PBF Energy’s CEO, said, “The second quarter of 2015 was another in a string of positive quarters for PBF’s East Coast refineries. We feel that the East Coast is proving itself to be a consistent and reliable earner for the company and that our results reflect its valuable contribution.
Our Mid-Continent results were as expected given the down-time during the quarter and Toledo missed an opportunity given the market environment.”
Nimbley continued, “Across our refineries we experienced higher input cost versus the prior quarter which were partially offset by improved margins in both the Mid-Continent and East Coast markets. Economics for rail-delivered crudes remained challenged throughout the quarter and we relied on our sourcing flexibility to maximize our use of more economic waterborne barrels. We are pleased to have announced the completion of the drop down of the Delaware City Products Pipeline and Truck Rack to PBF Logistics and the agreement to acquire the Chalmette Refinery and its attendant logistics assets. The sale of the Delaware City Products Pipeline and Truck Rack resulted in aggregate proceeds to PBF Energy of $143 million.”
In commenting on the pending refinery purchase, the PBF CEO stated that “based on our preliminary estimates, we expect to increase the annual EBITDA (earnings measurement) of Chalmette to $245 – $275 million through commercial and refinery optimization opportunities we have identified. We are still in the early stages of the acquisition and as we approach the close, expected near year-end, we will continue to provide updates regarding the potential we see in these soon to be acquired assets. Sufficed to say, we are excited about the Chalmette transaction and, upon closing, we will have grown our refining capacity by 35 percent and added meaningful scale, accretive earnings and diversity to our business. We will continue our focus on operating safely and pursuing additional opportunities to grow the company and increase shareholder value.”
On June 18, PBF announced that its subsidiary signed an agreement to purchase Chalmette Refining, LLC, consisting of the 189,000 barrel per day Chalmette Refinery and related logistics assets, from ExxonMobil and PDV Chalmette, LLC, a joint venture between the oil giant and the government-owned oil company in Venezuela.
The purchase price for the assets is $322 million, plus working capital including inventory to be determined at closing. The transaction is expected to close prior to year-end 2015, subject to customary closing conditions and regulatory approvals. Also included are pipeline and a marine terminal.
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