PBF Energy. State College, PA. North East Association of Rail Shippers Fall Conference. October 1, 2014

Transcription

1 PBF Energy North East Association of Rail Shippers Fall Conference State College, PA October 1, 2014

2 Safe Harbor Statements This presentation contains forward-looking statements made by PBF Energy Inc. and/or PBF Logistics (the Company or Companies, PBF or PBFX ) and its management. Such statements are based on current expectations, forecasts and projections, including, but not limited to, anticipated financial and operating results, plans, objectives, expectations and intentions that are not historical in nature. Forward-looking statements should not be read as a guarantee of future performance or results, and may not necessarily be accurate indications of the times at, or by which, such performance or results will be achieved. Forward-looking statements are based on information available at the time, and are subject to various risks and uncertainties that could cause the Company s actual performance or results to differ materially from those expressed in such statements. Factors that could impact such differences include, but are not limited to, changes in general economic conditions; volatility of crude oil and other feedstock prices; fluctuations in the prices of refined products; the impact of disruptions to crude or feedstock supply to any of our refineries, including disruptions due to problems with third party logistics infrastructure; effects of litigation and government investigations; the timing and announcement of any potential acquisitions and subsequent impact of any future acquisitions on our capital structure, financial condition or results of operations; changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof affecting our business or industry, including any lifting by the federal government of the restrictions on exporting U.S. crude oil; actions taken or non-performance by third parties, including suppliers, contractors, operators, transporters and customers; adequacy, availability and cost of capital; work stoppages or other labor interruptions; operating hazards, natural disasters, weather-related delays, casualty losses and other matters beyond our control; inability to complete capital expenditures, or construction projects that exceed anticipated or budgeted amounts; inability to successfully integrate acquired refineries or other acquired businesses or operations; effects of existing and future laws and governmental regulations, including environmental, health and safety regulations; and, various other factors. Forward-looking statements reflect information, facts and circumstances only as of the date they are made. The Company assumes no responsibility or obligation to update forward-looking statements to reflect actual results, 2 changes in assumptions or changes in other factors affecting forward-looking information after such date.

3 PBF Energy Company Profile Market capitalization of $2.7 billion and enterprise value of $3.5 billion (1) Ba3 / BB- credit ratings Owns three oil refineries in Ohio, Delaware and New Jersey Aggregate throughput capacity of ~540,000 bpd Weighted-average Nelson Complexity of 11.3 Access to East Coast rail infrastructure results in the entire system having access to WTI-based, cost advantaged crude supply PBF's core strategy is to grow and diversify through acquisitions Region Throughput Capacity (bpd) Date Acquired Nelson Complexity Mid-continent 170,000 Early East Coast 370, Total 540, (2) 1. As of 8/25/ Represents weighted average Nelson Complexity for PBF s three refineries PBF is the 5 th largest independent refiner Toledo Paulsboro Delaware City 3

4 PBF Logistics LP Company Profile y PBF Logistics launched its initial public offering on April 30, 2014 and commenced trading on the NYSE on May 9, 2014 y Market Cap of ~$800 million as of 9/2/14 y PBF Energy owns 50.2% of PBFX, 100% of the GP and IDRs y PBFX s assets consist of a light crude oil rail unloading terminal at the Delaware City refinery and a crude oil truck unloading terminal at the Toledo refinery Rail terminal current capacity of 130,000 bpd Truck terminal current capacity of 15,000 bpd y $275 million undrawn revolving credit facility provides flexibility to fund potential acquisitions and organic growth projects y Significant portfolio of logistics assets retained at PBF that support refinery operations y Further information can be found in PBF Logistic s SEC filings located at or on the SEC website 4

5 PBF Logistics Delaware City Rail Terminal Enhances flexibility and profitability of PBF s East Coast refining operations y Light crude oil rail unloading terminal y Supports Delaware City and Paulsboro refineries Combined refining capacity: 370,000 bpd y Supplies cost-advantaged, WTI-based light crude from Western Canada and U.S. Mid-continent y Current discharge capacity: 130,000 bpd Double-loop track accommodates up to two 100-car unit trains Original construction completed: February 2013 Expansion completed: August 2014 y 100% of NTM forecast revenue secured through MVCs MVC will increase from 75,000 bpd to 85,000 bpd beginning Q y Minimal ongoing maintenance capital expenditures Less than $1.3 million per year 5 4

6 PBF Logistics Toledo Truck Terminal 15,000 bpd truck crude unloading facility Services PBF s 170,000 bpd Toledo refinery Primarily receives locally-gathered, cost-advantaged crude Potential for growth through increased production in nearby shale basins, including Utica Shale in Ohio and New Albany Shale in Illinois Newly constructed assets Assets placed into service: Dec June 2014 Critical infrastructure to PBF s Toledo refinery 100% of NTM forecast revenue secured through MVCs MVC increased from 4,000 to 5,500 barrels per day as of August 1, 2014 due to the addition of two new LACT units Increase of 1,500 barrels not included in S-1 NTM forecast Minimal ongoing capital expenditures: Less than $1 million per year 6 Forest City Basin Source: EIA Michigan Basin Illinois Basin Antrim Cherokee Platform New Albany Fayetteville Toledo Chattanooga UticaDevonian (Ohio) Marcellus Appalachian Basin Shale Plays Current Plays Prospective Plays Basins Stacked Plays Shallowest / Youngest Intermediate Depth / Age Deepest / Oldest 5

7 Delaware City Heavy Crude Unloading Rack ( West Rack ) y Heavy crude oil rail unloading terminal y Current discharge capacity: 40,000 bpd Unit-train capable, steam and nitrogen equipped to unload heavy crude oil and bitumen Construction completed and in-service in August 2014 y Supplies cost-advantaged, heavy crude and bitumen from Western Canada y In-service date coincides with completion of unit-train capable loading facilities in Canada y 100% of NTM forecast revenue secured through MVCs MVC of 40,000 bpd $2.20 per barrel unloading fee (MVC) y Annual maintenance capex of approximately $1.25 million y No direct commodity price exposure 7 7

8 U.S. Refining Industry Landscape North American Crude Oil Production y Secular growth in North American crude oil production y Favorable price dislocations between North American crude and rest of world y Growth in supply driving decline in U.S. natural gas pricing Inexpensive Natural Gas y U.S. natural gas, 2014 year-to-date, prices almost 60% below European natural gas y Higher complexity than Atlantic Basin Competition Complex Refineries Product Exports y U.S. average refinery Nelson Complexity of 10.8 versus Western European average refinery Nelson Complexity of 7.8 y Cost and technological advantages have spurred export opportunities East Coast to Europe, West Africa, and Latin America 8

9 Strong Fundamentals for Industry and PBF MMbpd y Reached inflection point with growth of domestic crude oil and natural gas in y Bakken crude production has grown over 400% (910 mbpd) from 2010 through 2014 Pushes barrels South (via pipeline and rail), East and West (primarily by rail) Ultimately displaces USGC imports Source: EIA, CAPP y Canadian crude production has grown by over 30% (850 mbpd) from 2010 to 2014 Bitumen by rail advantaged versus pipeline transportation of diluted crudes US Canada ($/MMBtu) y Low-cost natural gas versus Europe 4 Proximity to increasing domestic supply 2 such as the Marcellus Shale development 0 Jan-08 Jan-09 Source: Bloomberg 9 Jan-10 Jan-11 Jan-12 Jan-13 Henry Hub ICE Natural Gas Jan-14

10 PBF s Crude-by-Rail Program y East Coast access to cost-advantaged North American crude oil provides optionality Planned Leased or Owned Railcars 7, ,000 bpd PBFX-owned light crude oil unloading 5,900 6,000 facility 4,658 5,000 40,000 bpd PBFX-owned heavy crude oil unit-train unloading capacity ( West Rack ) 40,000 bpd PBF-owned heavy crude oil unloading 4,000 3,479 3,000 1,359 2,221 2,000 capacity 1,000 2,300 2,120 2,347 2Q14 4Q14 3,600 - y Longer-term focus on logistics Rail services agreements with Norfolk Southern, BNSF, Savage Coiled & Insulated 4Q15 General Purpose Note: Schedule is subject to change based on current company plans and on current third party railcar manufacturer delivery schedules Supply agreement with Continental Resources for Bakken Potential opportunities for participation in logistics projects PBF will lead the way on rail safety y All crude oil delivered to our Delaware City refinery is transported in the new-style DOT-111A rail cars y PBF supports increased efforts to enhance the safety of rail operations through the use of a modernized rail fleet, improved operating standards, increased rail inspection and maintenance activities to ensure the safe transport of all crude oil and products 10

11 Major Tankcar User s Perspective Buying and leasing deciding factors Full service vs. net lease Under the tank repairs / wheel life / Taxes Cash flow and Fleet diversification for risk management Considerations for tankcar repairs Fleet utilization and cost including freight implications. Out of service time Types of repairs and car suppliers Commodity shippers know their products. Car suppliers do not accept responsibility for certain components like valves and in some cases tank linings etc. Advantages and disadvantages of end user of commodities shipped by tank car with no fleet of its own: Advantage: if the lease market is weak the delivered buyer will have a cost advantage Disadvantage: no control = risk. Risk management is key in all facets of commodity trade Best practices tank car acquisition and management Reputable suppliers / Zero incidents / cars directly in service / limited warranty claims Car management a hybrid of mixed cost management, TVM and best in class personnel and systems 11

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