Fri, Sep. 9, 12:44 PM
- PBF Energy (PBF -4.6%) is downgraded to Sell from Neutral with a $19 price target, cut from $23, while CVR Energy (CVI +5.3%) is upgraded to Neutral from Sell with a $15 target, raised from $13, at Goldman Sachs.
- In cutting PBF to Sell, Goldman foresees negative free cash flow generation, reflecting ~6% 2016-18 free cash flow yield that translates to a long-term dividend reduction; the firm also cites downside to guidance at the Chalmette and Torrance refining assets, higher RINs exposure, and tough conditions in the U.S. east coast refining market.
- Goldman thinks CVR shares are due to stabilize after a tightening of Brent-WTI differentials and an increase in RIN- and ethanol-related expenses.
Tue, Aug. 30, 3:20 PM
- Exxon Mobil (XOM -0.3%) is seeking a potential buyer for its 60K bbl/day Billings, Mont., refinery, one of only two XOM refineries in the U.S. that is not integrated with its chemical operations, Reuters reports.
- Potential buyers including PBF Energy (PBF -0.5%) have visited the plant this summer, according to the report, which says the plant also could attract interest from other independent refiners and Canadian oil producers that seek additional processing capacity.
- The Billings refinery is considered one of the highest quality plants in the Rocky Mountains, but analysts say plants that do not produce chemicals may have a less predictable profit stream, making them candidates for majors to sell off as refining margins have narrowed.
Tue, Aug. 30, 12:58 PM
- Phillips 66 (PSX +0.6%) has cut production by ~5% at its 238K bbl/day refinery in Linden, N.J., amid weak refining margins, Reuters reports.
- PSX joins Monroe Energy's 185K bbl/day refinery in Trainer, Pa., in making economic run cuts on the U.S. east coast; the Delta Air Lines (DAL +1.9%) subsidiary continues to run the refinery at ~150K bbl/day following run cuts that began in July, according to the report.
- Philadelphia Energy Solutions, the largest east coast refinery, reportedly is currently running at full capacity; it is not yet known whether PBF Energy (PBF -0.1%) has made cuts at either of its refineries in Delaware City, Del., and in Paulsboro, N.J.
Tue, Aug. 16, 4:42 AM
- Billionaire investor Carl Icahn has called on the EPA to make changes to the market for renewable fuel credits or else risk "the mother of all short squeezes" that could bankrupt refiners.
- "The RIN market is the quintessential example of a 'rigged' market where large gas station chains, big oil companies and large speculators are assured to make windfall profits at the expense of small and midsized independent refineries which have been designated the 'obligated parties' to deliver RINs."
- Related tickers: VLO, NTI, CLMT, MPC, TSO, ALDW, CVI, WNR, PBF, DK, HFC, CVRR, NTI, ALJ, TSO, WNR, PSX, XOM, PBF
Thu, Aug. 11, 6:57 PM
- Major U.S. refiners are on track to pay record amounts this year for credits to comply with U.S. renewable fuel rules, a trend that is bound to continue to hurt profits for the group, Reuters reports.
- A group of 10 refinery owners including Marathon Petroleum (NYSE:MPC) and Valero Energy (NYSE:VLO) spent at least $1.1B buying RINs, according to a Reuters review of their filings, placing them on track to surpass the annual record of $1.3B spent by the same group in 2013.
- RINs averaged ~$0.78 each during Q2, ~25% above the same period a year ago, according to the analysis, due to more ambitious targets from U.S. regulators on the volumes of ethanol required to be blended with gasoline.
- Other relevant tickers include PBF, CVRR, HFC, TSO, PSX, WNR, DK.
Thu, Aug. 11, 4:51 PM
- PBF Logistics (NYSE:PBFX) agrees to acquire a 50% interest in Torrance Valley Pipeline from an affiliate of PBF Energy (NYSE:PBF) for ~$175M.
- Torrance Valley owns the 189-mile San Joaquin Valley Pipeline system in California with a throughput capacity of ~110K bbl/day and comprised of the primary crude gathering and transportation lines that supply PBF Energy's Torrance refinery.
- To help fund the deal, PBFX announces a 4M-unit public offering, with an underwriters option to purchase up to an additional 600K common units.
- PBFX -3%, PBF +0.7% AH.
Fri, Aug. 5, 12:25 PM
- The American Fuel and Petrochemical Manufacturers trade group is petitioning the EPA to change the way the agency enforces the U.S. biofuel mandate, shifting the responsibility of program compliance with distributors who blend gasoline with ethanol for delivery to filling stations, not with refiners who make the fuels.
- The AFPM and other oil and gas groups have long been opposed to the Renewable Fuel Standard, which sets the amounts of biofuels such as ethanol that must be blended into U.S. gasoline and diesel supplies annually, arguing the mandates are costly for refiners and do not reflect actual gasoline demand, which has not risen as fast as lawmakers originally envisioned.
- Renewable fuel credits have surged 32% in the past two months, even as crude oil prices have dropped; this year, U.S. refiners will pay $1.8B for the RIN credits, adding to the pain of the lowest summer profit margins in five years.
- Relevant tickers include VLO, PBF, CVRR, HFC, REGI, PEIX, REX, GPRE
Fri, Jul. 29, 6:37 AM
Fri, Jul. 29, 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?