How Is PBF’s Segment-by-Segment Performance?



PBF’s segmental analysis: Refining segment

PBF Energy (PBF) operates through its refineries located in Delaware, Ohio, and New Jersey in the United States. PBF’s total refining capacity stood at 540,000 bpd (barrels per day) in 3Q15. Post-acquisition of the Chalmette and Torrance refineries, the company’s total refining capacity is expected to rise to 884,000 bpd.

PBF’s peers Western Refining (WNR), HollyFrontier (HFC), and CVR Refining (CVRR) have refining capacities standing at 156,000 bpd, 443,000 bpd, and 185,000 bpd, respectively. The iShares Russell 1000 Value ETF (IWD) has ~13% exposure to energy sector stocks. IWD has PBF and HFC in its portfolio.

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PBF’s refining margin and throughput

A refiner’s operating income is primarily dependent on its gross refining margin (or GRM). PBF noted a rise in its GRM to $13 per barrel in 3Q15, an increase of $0.4 per barrel over 3Q14. This was partly offset by a $0.2 per barrel rise in operating costs.

Still, PBF’s net refining margin rose by $0.2 per barrel over 3Q14 to $8 per barrel in 3Q15. However, in 3Q15, PBF’s throughput fell by 4% to 44 million barrels.

PBF’s logistics segment

PBF’s logistics segment includes PBF Logistics (PBFX), which was formed to own, operate, grow, and acquire logistics assets including pipelines, terminals, storage, and similar facilities. On September 30, 2015, PBF Energy Company held 53.7% limited partner interest in PBFX, plus all the incentive distribution rights. As of September 30, 2015, PBF Energy held 94.4% interest in PBF Energy Company.

PBF’s logistics segment reported a rise in its operating income from $5.9 million in 3Q14 to $27.5 million in 3Q15. PBF plans to strengthen PBFX by growing and acquiring new logistics assets. Plus, drop-downs are likely to provide further impetus to PBFX’s growth.


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