PBF Energy Inc. (NYSE:PBF) Q4 2022 Earnings Call Transcript

Matt Lucey: And in regards to renewable diesel and the timing, the project comes on in 2 stages. You have what was the hydrocrackers now, the renewable diesel unit. That will come on first and we’ll actually line out that unit with vegetable oils because we don’t have the pretreated facility up and running. And then the pretreatment unit will come on or scheduled to come on mid-second quarter. And with that, you have the expectation that — or at least some chance that the joint venture will probably close in the middle, if you say it takes 45 or 75 days to close the transaction, there’s a reasonable chance that the closing of the partnership will be after we start up the renewables easily but prior to the pretreatment facility being lined out.

And as I said earlier, the dollars will flow. I’m not going to get into the specifics of what you guys can — I think we’re making all the appropriate filings but it’s about half will be paid at closing — and then the other half will be paid once the pretreatment facility is up and running. And then, you do have an incremental $50 million with which is not based on stretch goals but it’s based on us meeting our timing expectations as well as the unit performing the volume standpoint, we expect it to operate that will flow in sort of as those thresholds are met. So it’s pretty straightforward. I would just make 1 caveat. This is nothing to do with your question but I’ll mention it is just a reality of entering the renewable diesel business because so much of the business is on the back of regulatory credits.

Your first 6, 9 months of operations are impacted financially by arbitrary carbon scores, meaning it takes a while for the regulatory agencies to confirm all of the low carbon intensity fuels that you may be running. So for a period of time, your — as I said, your carbon intensity score is a fixed number. And then, as you work with the agencies and everything gets embedded, it becomes straight away. But that’s just a lining out issue that will occur from start-up going out 6 to 9 months.

Jason Gabelman: Great. And then can you comment on the payout structure, if there’s anything out of the ordinary of people putting cash?

Matt Lucey: I’m sorry, I didn’t catch that.

Jason Gabelman: Just on the payout structure of the joint venture, if there’s anything out of the ordinary in terms of risk it paying out 50-50 cash.

Matt Lucey: It couldn’t be more simple. They pay cash, cash.

Operator: We’ve reached end of our question-and-answer session. I’d like to turn the floor back over to Tom Nimbley for closing remarks.

Tom Nimbley: Thank you very much, everyone, for joining the call. We look forward to updating you further at the end of the — when we do the first quarter call. Have a great day.

Operator: Thank you. This concludes today’s conference. You may disconnect your lines at this time. We thank you for your participation today.