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

Tom Nimbley: I am sorry. Roger has already had his turn. I’m sorry, he does. Actually, I believe what you said is correct. We should go back to the fact that there’s a couple of things that work in all benefit. But PES going down, it was a big deal. We — that was obviously the largest refinery in PAD 1 . The pipelines are pretty much coming up from the Gulf Coast. So when you get — and that was certainly the case with the distillate situation, as people were concerned that we would not be able to fill in the market. In addition to PES, we had come by chance go off-line as a result of the pandemic. So PAD 1 has gone into a situation where chronically, it was always been you all know this. It’s a dumping ground for Europe to move gasoline in.

Now we’ve got a different situation in Europe and we have a significantly different situation in PAD 1 and in fact, in the U.S. and of course, the gold because of the amount of capacity that’s been rationalized. So, I think it’s got the potential to be a structurally short market. And when you see — we’ll see, we’re going to demonstrate it right now. Bayway FCC is going through a turnaround. That’s a big gasoline producer, obviously, very large cat cracker. But we saw that manifest itself. We’ve seen it manifest itself in spiking jet prices and distillate prices where there was a concern about supplying the market. We’re not going to see what we had last year, I don’t believe. But in fact, I do think that is a strategic shift in capacity utilization.

And we’re going to have to run off or hard to meet the product demand in the country, in the world and in PAD 1 .

Operator: Our next question is coming from John Royall from JPMorgan.

John Royall: I just had a question on the $8 to $8.50 per barrel OpEx guidance in 2023. It looks like a top fair amount from ’22 which is already elevated despite lower natural gas. So has this increase all on maintenance? Or are there other drivers you should be thinking about?

Tom Nimbley: Certainly, there are other drivers. And that right now, obviously, Henry Hub on gas prices but that’s not necessarily the true for the other regions in the country. So we’ve got some increases in energy cost but we also are seeing inflationary pressures in a lot of the business that have resulted from the fact that inflation is high. So — and the other thing we’ve got is the increase in turnarounds that obviously there’s — that’s capital cost but there were some other additional maintenance costs that go along with that.

John Royall: Great. That’s helpful. And then I think, Tom, you mentioned in the opener, you’ve spoken about the Europe sanctions the February 5 date is come and gone so far, it felt like a nonevent but still very early days. And so how do you expect those actions to impact the market as we get deeper into the year?