Falling Crude Prices Are Making PBF Energy Look Cheap
Tristan R. Brown
Tristan R. Brown
Headwinds Arise For PBF Energy
Tristan R. Brown
Tristan R. Brown
Yesterday, 6:37 AM
Yesterday, 6:33 AM
Mon, Jul. 25, 12:56 PM
- Some U.S. refiners, stuck with the highest inventories of gasoline for this time of year in a quarter of a century, have started blending winter grade gasoline a month earlier than usual to sell later in the year, Reuters reports.
- Looking to cut costs, refiners and blenders reportedly are making an early move to mix cheap butane - a cheaper blending component than most other ingredients - to convert the summer barrels into winter barrels.
- Mixing more winter gasoline now threatens to worsen the glut later, but that's a risk willingly taken by an industry left with few other choices, the report says.
- Independent U.S. refiners are expected to post another quarter of weak earnings en route to possibly the worst year since the shale boom began in 2011.
- Refiners are broadly lower today as crude oil prices drop: PSX -1.6%, VLO -0.7%, MPC -2.3%, TSO -1.6%, HFC -0.7%, WNR -0.3%, PBF -1.5%, DK -0.6%, ALJ -1.7%.
Mon, Jul. 11, 11:55 AM
- PBF Energy (PBF -0.3%) is downgraded to Neutral from Overweight with a $21 price target, cut from $33, at J.P. Morgan, which says the company's valuation and leverage combination are less compelling.
- The firm says PBF’s heavy crude slate and position in markets that are short products, namely the U.S. east coast and Los Angeles area, offer an advantage, and execution on the Chalmette and Torrance acquisitions could lend upside in the future, but “the risk/return profile appears fair" for now.
- JPM says it is lowering its Q2 estimates, “as cracks softened in the final weeks of 2Q and capture rates now look even more negative than we thought Q/Q,” and reduces full-year estimates as well since strip cracks have continued to decline in early Q3.
Fri, Jul. 8, 3:23 PM
- Phillips 66 (PSX +0.6%) is downgraded to Market Perform from Outperform at Wells Fargo, citing PSX's relative outperformance and a "shakier outlook" for the company's refining operations.
- The firm lowers its expectations for the quarter, the rest of this year and 2017, seeing the bumpy start to Q3 as “rapidly eroding” hopes for a strong summer; nevertheless, it maintains Outperform ratings on Marathon Petroleum (MPC +2.2%), PBF Energy (PBF +1%) and Valero Energy (VLO +0.9%).
- Despite a recent 3.6M-barrel drawdown in gasoline stocks, inventories remain much higher than a year ago, and analysts have been cutting earnings estimates for big U.S. refiners who report Q2 results in coming weeks.
Wed, Jun. 29, 3:58 PM
- Tesoro (TSO +1.9%) is upgraded to Buy from Neutral with a $100 price target, lifted from $96, at Goldman Sachs, citing a more constructive outlook for the California refining market, underappreciated value in non-refining assets, and limited risk from higher RINs and a lower Brent-WTI spread.
- Goldman thinks the California refining market will remain well-balanced, despite Torrance returning to service, driven by growing regional demand and the currently low inventories, and that investors have not been giving TSO fair value for its non-refining businesses.
- At the same time, the firm downgrades PBF Energy (PBF +1.2%) to Neutral from Buy with a $26 price target, cut from $37, expecting the company to be “disproportionately negatively impacted” by expectations of higher RINs prices.
- Along with TSO, Goldman rates Valero (VLO +0.1%) and Marathon Petroleum (MPC +4%) as Buys among refiners, while maintaining Sell ratings on Phillips 66 (PSX +1.2%), HollyFrontier (HFC +0.1%), CVR Energy (CVI -0.4%) and CVR Refining (CVRR -1%).
Wed, Jun. 22, 1:56 PM
- PBF Energy (PBF -1.7%) once expected to take control of the Torrance, Calif., refinery from Exxon Mobil (XOM -0.2%) by around May 1, but the handoff has been plagued with problems, and PBF now expects to take over the refinery on July 1, Bloomberg reports.
- A crane that fell over this week is the latest incident to highlight the challenges in finalizing the $537M sale, after damage from a February 2015 explosion forced the closure of a catalytic cracker, which finally was restarted just a month ago.
- The delays are keeping PBF from fully benefiting from typically higher margins seen during peak driving season, but PBF is not likely to walk away from the deal, as it still wants control of the Torrance plant to gain exposure to the West Coast gasoline market.
Thu, May 26, 6:36 PM
- Oil refiners such as Marathon Petroleum (NYSE:MPC), Delek US Holdings (NYSE:DK) and HollyFrontier (NYSE:HFC) are better positioned than the market suggests, Deutsche Bank analysts say.
- The firm thinks current refiner share price levels offer an attractive entry point or to add to positions for longer-term investors, with MPC, DK and HFC screening best with respective 19%, 13% and 8% upside; while from a free cash flow standpoint, only Valero Energy (NYSE:VLO), MPC and HFC find themselves in positive territory, offering respective 6.3%, 5% and 1%.
- For shorter-term investors, the firm sees PBF Energy (NYSE:PBF), HFC and DK with the highest downside risk, while MPC is a relative winner in both cases.
- Contrary to popular belief that higher crude prices are all else being equal a negative for refiners, Deutsche Bank believes a slow grind higher to $60-$65/bbl could be a sweet spot for refiners since the structural advantage of U.S. refiners vs. international refining is more pronounced.
Fri, May 6, 8:41 AM
- Exxon Mobil (NYSE:XOM) is expected to enter the final phases of returning its Torrance refinery in California to full operation this weekend, LA Times reports.
- As part of its start-up procedure, XOM plans to turn off the refinery's pollution control system for six hours, a step approved by the South Coast Air Quality Management District.
- The refinery has been operating at only ~20% of its normal production since a February 2015 explosion destroyed the plant's pollution control system; without the full operation of the plant, which usually generates 20% of southern California's refined gasoline capacity, gas prices in the Los Angeles region rose as much as $1.50 above the national average last year.
- After Torrance is fully operational, XOM plans to sell the plant to PBF Energy (NYSE:PBF) in a deal expected to close by midyear.
- Now read Exxon Mobil: Can dividends increase forever?
Thu, Apr. 28, 7:17 PM
- Q1 earnings reports illustrate the end of U.S. refiners' years-long boom from cheap and plentiful crude, Reuters reports, as rising oil inventories and weak demand hurt profits and pushed revenues to their lowest in years.
- PBF Energy (NYSE:PBF) and CVR Energy (NYSE:CVI) reported respective quarterly losses of $66.5M and $68M (I, II), while Marathon Petroleum (NYSE:MPC) eked out a $1M profit following earnings of nearly $900M a year ago, and reported their weakest revenue totals in at least four years.
- Refiners "were incentivized to run at higher rates and put more barrels in inventory. That's the overhang we're seeing right now," CVR CEO Jack Lipinski said in today's earnings conference call.
- PBF also coped with downtime at its Delaware plant because of a weather-related power outage in January.
- Phillips 66 (NYSE:PSX) is scheduled to report Q1 results tomorrow, with Valero Energy (NYSE:VLO), Tesoro (NYSE:TSO) and others coming next week.
- Now read The best of the best in the refining industry
Thu, Apr. 28, 6:51 AM
Thu, Apr. 28, 6:41 AM
Fri, Apr. 8, 5:40 PM
Fri, Apr. 8, 2:45 PM
- PBF Energy (PBF +3.9%) is J.P. Morgan's favorite stock among oil refiners, initiating coverage of the company with an Overweight rating and $40 price target.
- "PBF checks all of the boxes we look for around valuation on both sum-of-the-parts and sustaining [free cash flow] yield, [and] it has flexible pro forma balance sheet metrics that leave room for additional opportunities,” the firm says.
- The firm expects solid upside for PBF following the inexpensive acquisitions of Chalmette and Torrance.
- JPM also notes that PBF owns a 54% LP stake in its PBF Logistics midstream subsidiary, which is expected to generate pro forma EBITDA of $145M in 2017.
- Now read Wells Fargo's three oil refiners with the most upside: Valero, PBF, Delek
Mon, Apr. 4, 7:44 AM
- Regulators have agreed to let Exxon Mobil (NYSE:XOM) resume operations at its Torrance, Calif., oil refinery more than a year after an explosion crippled the plant.
- The South Coast Air Quality Management District board voted 3-2 to allow the restart following a boisterous daylong public hearing on Saturday, but passage was expected.
- During the restart, the refinery is expected to pump emissions into the air for about six hours longer than allowed by the South Coast Air Quality Management District, so the regulator told XOM not to restart during school and business hours, when people could be exposed to excess pollution, and pay $5M in penalties for air pollution violations after the explosion.
- XOM is selling the refinery to PBF Energy (NYSE:PBF) for $537M, though the plant must be operational before the sale is completed; some opponents of the plant criticized XOM at the hearing for getting the plant up and running just so it can complete the sale.
- Now read Exxon Mobil: More reasons why you should be buying
Sat, Apr. 2, 12:45 AM
- The anticipated return to service of Exxon Mobil's (NYSE:XOM) Torrance refinery, which has operated at less than 20% of capacity since a February 2015 explosion, could help narrow the ongoing gap between fuel prices for motorists in southern California and other parts of the U.S.
- Today, the South Coast Air Quality Management District will hold a hearing in Torrance to review XOM's request to fully restore the refinery, which usually provides 20% of the refined gasoline capacity in southern California and 10% of statewide capacity.
- Returning the refinery to full service will set the stage for the sale of the plant to PBF Energy (NYSE:PBF), which announced last fall that it was acquiring the facility once it is fully operational; the acquisition also could help lower California pump prices, depending on how aggressively PBF decides to operate.
- Some residents are alarmed by the planned restart, saying it is not known how much emissions limits will be exceeded and that residents are forced to rely on XOM rather than independent evaluations to provide data.
- In other Exxon news, the last group of union workers at its Baytown, Tex., refining and petrochemical complex have voted to accept a four-year contract extension, joining workers who had passed the extension in voting last week.
PBF Energy, Inc. operates as a petroleum refiner and supplier of unbranded transportation fuels, heating oil, petrochemical feedstocks, lubricants and other petroleum products in the United States. The company owns and operates oil refineries and related assets through its subsidiaries in New... More
Sector: Basic Materials
Industry: Oil & Gas Refining & Marketing
Country: United States
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