Fast-growing Delaware City Refining Co. owner PBF Energy Inc reported higher third quarter 2015 operating Income, excluding special items, of $298.4 million as compared to operating Income of $284.1 million for the third quarter of 2014.
Net income for the third quarter 2015, excluding special items, was $169.4 million, or $1.85 per share, compared to adjusted fully-converted net income of $155.6 million for the third quarter 2014.
PBF executives noted in an earnings call that the company is aided by the ability to refine various types of crude oil in Delaware City and other refineries as well as the flexibility of local management in adapting to regional conditions.
Another plus for the market came from motorists buying more high-octane gas as prices dropped at the pump.
“We operate locally,” executive chairman and founder Tom O’Malley said, noting that small purchases and other decisions do not go through a lengthy process at its northern New Jersey headquarters.
Results were affected by a strong performance by the Toledo refinery and higher expenses when the Delaware City refinery was hit in late summer by an equipment failure and small fire.
PBF is moving forward with a hydrogen project that according to published reports totals $100 million and will produce lower sulfur fuel for East Coast motorists. O’Malley does not expect the project to add a large amount to the company’s capital budget since such plants are typically operated by other companies that bear much of the cost.
Click here for the Coastal Zone filing on the project.
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 53.7 percent of the limited partner interests.
Nimbley said, “We benefited from a strong market in the third quarter that translated into solid earnings for our entire refining system,” Nimbley stated. “Our Mid-Continent asset outperformed and the East Coast delivered yet another positive quarter, demonstrating the flexibility of our operations and the benefits of having strategically located, complex refineries.”
Nimbley continued, “At the end of the quarter, PBF announced that we have entered into an agreement to purchase ExxonMobil’s Torrance refinery in California.
The addition of the two refineries will make PBF Energy the fourth largest independent refiner in North America with presence in all of the U.S. coastal markets and the Midwest market.
The pending purchases of the Louisiana refinery was expected to close on Nov. 1
Analysts asked numerous questions about the pending acquisitions and rail-delivered crude that typically goes to Delaware City.
PBF has cut rail shipments of more expensive Bakken crude oil from North Dakota but is still handling heavier crude oil from Canada on the East Coast. The Louisiana refinery might also process more rail-delivered crude depending on market conditions.
Executives stressed that the company will not close on the transaction of the Torrance refinery in Southern California until Exxon Mobil demonstrates it can run on a reliable basis.
A February start-up date has been announced at the refinery, which has been shut down after a couple of incidents.
O’Malley told analysts that Exxon Mobil does a good job in upgrading refineries and expressed confidence that work is being done the right way.
The PBF chairman said he and Nimbley have more than two decades of experience in dealing with the California market, which, like Delaware, is affected by stiff clean air standards and other regional quirks. O’Malley added that the company has no plans to operate its own system of gas stations and convenience stores, although staff has experience in that area.
That confidence extends to the Louisiana, which is being sold by a joint venture that includes Exxon Mobil and the government-owned refinery in Venezuela. PBF officials said the Chalmette refinery, which is just outside New Orleans, had a good year and should see additional improvements once PBF takes over operations.
