The proceeds to PBF Energy from this offering, before deducting underwriting
discounts, will be approximately $533.0 million (or $613.0 million if the
underwriters exercise in full their option to purchase additional shares of
Class A common stock).
PBF Energy intends to use $491.4 million (or $571.4 million if the underwriters
exercise in full their option to purchase additional shares of Class A common
stock), of the proceeds from this offering to purchase PBF LLC Series A Units
(which will be reclassified as PBF LLC Series C Units in connection with such
acquisition) from Blackstone and First Reserve. Accordingly, we will not
retain any of these proceeds.
PBF Energy intends to use all of the remaining proceeds from this offering, or
$41.6 million, to purchase newly-issued PBF LLC Series C Units from PBF LLC. We
intend to cause PBF LLC to use these proceeds to pay the expenses of this
offering, including aggregate underwriting discounts of $29.3 million (or $33.7
million if the underwriters exercise in full their option to purchase additional
shares of Class A common stock) and other offering expenses estimated at $7.8
million. Any remaining proceeds will be used by PBF LLC for general corporate
purposes, including to potentially repay outstanding indebtedness under the ABL
Revolving Credit Facility.
The ABL Revolving Credit Facility is scheduled to expire on October 26, 2017. As
of September 30, 2012, there were no outstanding loans under the ABL Revolving
Credit Facility.
Pending specific application of these proceeds, the proceeds will be invested
primarily in cash.
The refining business is very competitive. We compete directly with various
other refining companies both on the East Coast and in the Midcontinent, with
integrated oil companies, with foreign refiners that import products into the
United States and with producers and marketers in other industries supplying
alternative forms of energy and fuels to satisfy the requirements of industrial,
commercial and individual consumers. Some of our competitors have expanded the
capacity of their refineries and internationally new refineries are coming on
line which could also affect our competitive position.
Profitability in the refining industry depends largely on refined product
margins, which can fluctuate significantly, as well as operating efficiency and
reliability, product mix and costs of product distribution and transportation.
Certain of our competitors that have larger and more complex refineries may be
able to realize lower per-barrel costs or higher margins per barrel of
throughput. Several of our principal competitors are integrated national or
international oil companies that are larger and have substantially greater
resources. Because of their integrated operations and larger capitalization,
these companies may be more flexible in responding to volatile industry or
market conditions, such as shortages of feedstocks or intense price
fluctuations. Refining margins are frequently impacted by sharp changes in crude
oil costs, which may not be immediately reflected in product prices.
The refining industry is highly competitive with respect to feedstock supply.
Unlike certain of our competitors that have access to proprietary controlled
sources of crude oil production available for use at their own refineries, we
obtain substantially all of our crude oil and other feedstocks from unaffiliated
sources. The availability and cost of crude oil is affected by global supply and
demand. We have no crude oil reserves and are not engaged in the exploration or
production of crude oil. We believe, however, that we will be able to obtain
adequate crude oil and other feedstocks at generally competitive prices for the
foreseeable future.
Company Description
We are one of the largest independent petroleum refiners and suppliers of
unbranded transportation fuels, heating oil, petrochemical feedstocks,
lubricants and other petroleum products in the United States. We were formed in
2008 to pursue acquisitions of crude oil refineries and downstream assets
in
North America. We currently own and operate three domestic oil refineries and
related assets, which we acquired in 2010 and 2011. Our refineries have a
combined processing capacity, known as throughput, of approximately 540,000 bpd,
and a weighted average Nelson Complexity Index of 11.3.
Our three refineries are located in Toledo, Ohio, Delaware City, Delaware and
Paulsboro, New Jersey. Our Midcontinent refinery at Toledo processes light,
sweet crude, has a throughput capacity of 170,000 bpd and a Nelson Complexity
Index of 9.2. The majority of Toledo’s WTI based crude is delivered via
pipelines that originate in both Canada and the United States. Since our
acquisition of Toledo in 2011, we have added additional truck and rail crude
unloading capabilities that provide feedstock sourcing flexibility for the
refinery and enables Toledo to run a more cost-advantaged crude slate. Our East
Coast refineries at Delaware City and Paulsboro have a combined refining
capacity of 370,000 bpd and Nelson Complexity Indices of 11.3 and 13.2,
respectively. These high conversion refineries process primarily medium and
heavy, sour crudes and have historically received the bulk of their feedstock
via ships and barges on the Delaware River. Importantly, in May 2012 we
commenced crude shipments via rail into a newly developed crude rail unloading
facility at our Delaware City refinery. Currently, crude delivered to this
facility is consumed at our Delaware City refinery. In the future we plan to
transport some of the crude delivered by rail from Delaware City via barge to
our Paulsboro refinery. The Delaware City rail unloading facility allows our
East Coast refineries to source WTI based crudes from Western Canada and the
Midcontinent, which provides significant cost advantages versus traditional
Brent based international crudes. We are in the process of expanding the rail
crude unloading capacity at Delaware City from 40,000 bpd to more than 110,000
bpd by early 2013 and have entered into agreements to lease approximately 2,400
crude railcars (comprised of approximately 1,600 coiled and insulated railcars
that are capable of transporting Western Canadian bitumen without diluent and
approximately 800 general purpose railcars) that are currently scheduled to be
delivered through the second quarter of 2014 and which will be utilized to
transport crude by rail to Delaware City.
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We produce a variety of products at each of our refineries, including gasoline,
ULSD, heating oil, jet fuel, lubricants, petrochemicals and asphalt. We sell our
products throughout the Northeast and Midwest of the United States, as well as
in other regions of the United States and Canada, and are able to ship products
to other international destinations. The majority of our finished products are
sold through long-term offtake and supply agreements. For example, we sell the
bulk of our gasoline, diesel and heating oil through long-term offtake
agreements with MSCG and Sunoco.
The following table provides summary operating information concerning each of
our three refineries:
Approximate
Throughput Nelson Estimated Benchmark Crack
Refinery Capacity (bpd) Complexity Index Replacement Cost Spread
Toledo 170,000 9.2 $ 2.4 billion WTI
(Chicago) 4-3-1
Delaware City 190,000 11.3 $ 3.1 billion Dated Brent
(NYH) 2-1-1
Paulsboro 180,000 13.2 $ 2.7 billion Dated Brent
(NYH) 2-1-1
Total 540,000 11.3 $ 8.2 billion
(weighted average)
For the year ended December 31, 2011 and the nine months ended September 30,
2012, we had (a) pro forma total revenues of $16.0 billion and $15.2 billion,
respectively; (b) pro forma Adjusted EBITDA of $480.7 million and $732.6
million, respectively; and (c) pro forma net income of $280.7 million and $503.3
million, respectively. Our pro forma results for the year ended December 31,
2011 do not include any adjustments for Delaware City to reflect incremental
revenue and operating expenses that we expect to generate in connection with the
re-start because the refinery was not operational when it was acquired and the
transaction was accounted for as an acquisition of assets, not a business
combination.
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PBF Energy is a Delaware corporation incorporated on November 7, 2011 with its
principal executive offices located at One Sylvan Way, Second Floor,
Parsippany, NJ 07054 and our telephone number is (973) 455-7500. Our website
address is www.pbfenergy.com.