PBF Energy Q3 2025 Earnings Call Transcript

Quartr
Provided by Quartr
October 30, 2025

Key Takeaways

  • Positive Sentiment: PBF says the Martinez refinery is on track for a methodical restart beginning in December and expects it to be fully operational by year end, with permits in place and major repair work largely completed — restoring capacity that should materially improve refining results when online.
  • Positive Sentiment: The company is on track to deliver $230 million of annualized run-rate savings by end-2025 (≈$0.50/boe), has implemented ~ $210M so far, and expects continued RBI-driven savings toward >$350M by end-2026, which should boost margins and free cash flow.
  • Neutral Sentiment: Q3 showed an adjusted net loss of $0.52 per share and adjusted EBITDA of $144.4M, while ending the quarter with $482M cash, ~ $1.9B net debt (32% net debt-to-cap) and ~ $2.1B liquidity, noting multiple one‑time items (insurance receipt, terminal sale, Martinez OpEx) that affect comparability.
  • Negative Sentiment: PBF recorded a ~$19.7M loss on its 50% stake in St. Bernard Renewables as RD production (15.4k bpd) fell short of guidance amid tariffs, policy shifts and market volatility; management says the RD market is challenging despite believing its asset is top‑quartile.
AI Generated. May Contain Errors.
Earnings Conference Call
PBF Energy Q3 2025
00:00 / 00:00

Transcript Sections

Skip to Participants
Operator

Good day everyone and welcome to the PBF Energy Third Quarter 2025 Earnings Conference Call and webcast. At this time, all participants have been placed in a listen only mode and the floor will be open for questions following the management's prepared remarks. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. It is now my pleasure to turn the floor over to Colin Murray of Investor Relations. Sir, you may begin.

Colin Murray
Colin Murray
VP of Investor Relations at PBF Energy

Thank you, Lily. Good morning and welcome to today's call. With me today are Matt Lucey, our CEO, Mike Bukowski, our Head of Refining, Joe Marino, our CFO, and several other members of our management team. Copies of today's earnings release and our 10-Q filing, including supplemental information, are available on our website. Before getting started, I'd like to direct your attention to the safe harbor statement contained in today's press release. Statements that express the company's or management's expectations or predictions of the future are forward-looking statements intended to be covered by the safe harbor provisions under federal securities laws. Consistent with our prior periods, we'll discuss our results excluding special items, which are described in today's press release. Also included in the press release is forward-looking guidance information. For any questions on these items or other follow-up questions, please contact Investor Relations following the call.

Colin Murray
Colin Murray
VP of Investor Relations at PBF Energy

I'll now turn the call over to Matt Lucey.

Matt Lucey
Matt Lucey
CEO at PBF Energy

Thanks, Colin. Good morning, everyone, and thank you for joining our call. First, I'd like to welcome and introduce Joe Marino as PBF's new Chief Financial Officer. Many on the call may be familiar with Joe as he's been with PBF since before our 2012 IPO and has been our Treasurer for the last five years. In the same breath, I'd like to thank Karen Davis for her service, and I'm thrilled to welcome her back to the Board of Directors. I want to address three topics: one, the status of Martinez; two, our third quarter performance; and lastly, the near-term outlook. Regarding Martinez consistent with our call in July, we are on schedule for a December restart. Maintenance teams are scheduled to be turning over the impacted units to operations in early December.

Matt Lucey
Matt Lucey
CEO at PBF Energy

As units get handed over, we will commence a deliberate and sequential restart of the affected units. Our plan is to have Martinez fully operational by the end of the year. The dedication of the Martinez team in this effort continues to be exemplary. While PBF's third quarter represented a sequential improvement over the prior few quarters, the real news is the sequential improvement that occurred during the quarter. Unquestionably, there was a shift in September, which represented a significant positive step in the right direction. While product cracks were relatively strong throughout the quarter, crude differentials only began to improve towards the end of the quarter. Now, as we sit in what is typically the seasonally weaker period, product cracks are quite strong, and crude differentials continue to widen.

Matt Lucey
Matt Lucey
CEO at PBF Energy

As we look past the fourth quarter into 2026, refined product supply constraints coupled with a well-supplied crude market should create a positive theme for domestic and global refining. Global demand continues to outstrip net refining capacity additions, and we expect to see additional capacity rationalizations that will be supportive of tight product balances. As we saw this month with the shutdown of another refinery in California, PBF remains focused on controlling the aspects of our business that we can control. We expect to be well positioned to capture favorable market conditions as we move forward. To be successful and enhance value for our investors, we must operate safely, reliably, and responsibly, and we must do it as efficiently as possible. To that end, we are on track with our commitment to our business improvement initiatives. We are working to improve our performance every day.

Matt Lucey
Matt Lucey
CEO at PBF Energy

To summarize, strong product cracks with improving crude dynamics coupled with the full power of our refining system as Martinez should be up by the end of the year operating with improved efficiency thanks to our RBI program, all of which should come together to create a dynamic environment for the company and our shareholders. With that, I'll turn it over to Mike.

Mike Bukowski
Mike Bukowski
Head of Refining at PBF Energy

Thank you, Matt. Good morning, everyone. Before discussing the progress of a Refining Business Improvement program, or RBI for short, I'll provide a few comments on third quarter operations and our Martinez refinery status. On the West Coast we continue to progress with the full repair and restart of Martinez. We plan to begin transitioning from maintenance to operations in early December. This time we will execute a methodical sequence startup plan with its primary focus being the safe, and environmentally sound restart of the repaired processing units. Our Martinez team has completed a tremendous amount of work this year. To give you a little bit of an idea as to the scale of this effort, in addition to completing the FCC turnaround, we are installing 130 tons of new steel, laying over 20,000 ft of pipe and over 200,000 ft of electrical and instrument cabling.

Mike Bukowski
Mike Bukowski
Head of Refining at PBF Energy

All major equipment components have arrived on site and we have completed installation of the two major columns that had to be replaced. I commend our Martinez team for continuing to execute the repair work safely while the team is focused on restoring operations. We will not let time be a constraint from executing the startup safely. While there has been a lot of focus on Martinez, our team at Torrance successfully and safely completed the hydrocracker turnaround in the third quarter. At Toledo at mid-summer, hydrocracker unplanned outage and pipeline maintenance impacted third quarter throughput. Aside from a few minor issues, the rest of our system operated reasonably well in the quarter and we have no major turnaround work for the remainder of the year.

Mike Bukowski
Mike Bukowski
Head of Refining at PBF Energy

Shifting topics to RBI, we are on track to meet our previously announced goal to implement $230 million of annualized run-rate savings by the end of 2025. This goal represents $0.50 per barrel, or approximately $160 million reduction in operating expenses against our 2024 benchmark and will be fully realized in 2026. In addition, we expect to reduce sustaining capital and turnaround expenditures by $70 million. As you may recall, we started this program with centralized efforts in procurement, capital projects, organizational design, turnarounds, and site efforts at our Torrance and Delaware Valley refineries. As of the third quarter, all refineries are engaged in RBI and are contributing to the savings goals. One of the recent successes achieved through the RBI program is a 5% cost reduction of our Torrance hydrocracker turnaround through our Productivity Improvement Initiative.

Mike Bukowski
Mike Bukowski
Head of Refining at PBF Energy

This program uses dedicated resources to identify and eliminate waste and remove barriers to job productivity. Additionally, we've achieved approximately $21 million in run-rate savings by revamping our procurement model to leverage our spending across the refining circuit. System-wide we are focusing on improving our maintenance efficiency and reinvesting some of the savings in energy reduction projects while also reducing our maintenance backlogs. The outcome will have the dual effect of improved energy efficiency and reliability. We are providing enhanced performance monitoring tools to our employees and incorporating them into our site work processes across the fleet. The new tools and processes will drive the organization to not only maintain our savings, performance, and efficiency, but drive continuous improvement.

Mike Bukowski
Mike Bukowski
Head of Refining at PBF Energy

Our main priority will always be to focus on safe, reliable, and responsible operations across our system. The RBI program will help us improve across all areas and result in a sustainable culture of operational excellence and continuous improvement. With that, I'll now turn the call over to Joe Marino for our financial overview.

Joe Marino
Joe Marino
CFO at PBF Energy

Thanks, Mike. For the third quarter we reported an adjusted net loss of $0.52 per share and an adjusted EBITDA of $144.4 million. Our discussion of third quarter results excludes the net effect of special items including $14.6 million in incremental OpEx related to the Martinez refinery in California, a $250 million gain on insurance recoveries, a $94 million gain on the sale of terminal assets, an $8.5 million loss relating to PBF's 50% share of SBR's LCM inventory adjustment for the quarter, and approximately $8 million of charges associated with the RBI initiatives. The $250 million gain on insurance recovery as related to the Martinez fire is a result of the second unallocated payment agreed to at the end of the third quarter, of which the majority has already been received in Q4.

Joe Marino
Joe Marino
CFO at PBF Energy

Going forward, we will continue to work with our insurance providers for potential additional interim payment. However, the timing and amount of any agreed upon future payment will be dependent on the amount of incurred covered expenditures plus calculated business interruption losses. Our Q3 P&L reflects incremental OpEx at Martinez of $14.6 million that we are reflecting as a special item because it relates to construction of temporary equipment to restart undamaged units and other fire-related non-capital expenses. While we anticipate recovering a portion of this amount through insurance, the specific amount will be determined as we progress further into the claims process. Generally speaking, any insurance proceeds we receive in future periods will be reflected as gain on insurance recoveries on our income statement and reported as a special item, shifting back to our normal quarterly results discussion.

Joe Marino
Joe Marino
CFO at PBF Energy

Also included in our results is a $19.7 million loss related to PBF's equity investment in St. Bernard Renewables. SBR produced an average of 15,400 barrels per day of renewable diesel in the third quarter. SBR's production was somewhat below guidance driven by broader market conditions in the renewable fuel space. Throughout the year we've seen impacts from tariffs cascade through the feed market and the policy landscape continues to shift, adding uncertainty and volatility to the business. Cash flow from operations for the quarter was approximately $25 million, which includes a working capital draw of approximately $74 million, primarily related to the timing of cash interest payments, movements in inventory, and falling commodity prices.

Joe Marino
Joe Marino
CFO at PBF Energy

Also included in our cash flow for the quarter are the previously announced tax refund of $75 million including interest and the $175 million received for the sale of the Knoxville and Philadelphia terminal assets excluding commission and closing costs. Cash invested in consolidated CapEx for the third quarter was approximately $132 million, which includes refining, corporate, and logistics. This amount excludes third quarter capital expenses of approximately $128 million related to the Martinez incident. Year to date, rebuild capital expenses through the end of the third quarter are approximately $260 million. Additionally, our Board of Directors approved a regular quarterly dividend of $0.275 per share. We ended the quarter with $482 million in cash and approximately $1.9 billion of net debt, maintaining our firm financial footing and a resilient balance sheet remain priorities.

Joe Marino
Joe Marino
CFO at PBF Energy

At quarter end, our net debt to cap was 32% and our current liquidity is approximately $2.1 billion, based on current commodity prices, cash, and borrowing capacity under our ABL. If you take into consideration the second installment of our insurance proceeds already received in Q4, our liquidity and net deposition has improved versus the prior quarter. As we look ahead, we expect to use periods of strength to focus on deleveraging and preserving the balance sheet. We've completed our opening remarks and we'd be pleased to take any questions.

Operator

In a moment we will open the call to questions. The company requests that all callers limit each turn to one question and one follow-up. You may rejoin the queue with additional questions. If you would like to ask a question, please press Star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment while we poll for questions. Your first question comes from Manav Gupta from UBS. Please go ahead.

Manav Gupta
Manav Gupta
Executive Director at UBS

Morning team, would like to first welcome Joe in his new role and wish him all the luck in this role. Matt, maybe for you or somebody else, but just, I mean, you made some positive comments about Martinez restart. I think there's a lot of focus on that given the capacity closures that are happening. Yes, some new pipelines might get built, but that could take two to three years. The key here is to get that refinery up and running. I'm just trying to understand your confidence level in getting this thing across the line. I understand, you know, sometimes there could be regulatory delays, but looks like the government wants you to get this up and running. Help us understand where we are in the process and your confidence level in getting this asset up and running by year end.

Matt Lucey
Matt Lucey
CEO at PBF Energy

Thanks, Manav. I don't anticipate any regulatory issues to be clear. We have all our permits and we've had a good working relationship with the state. As you said, I think they're very, very interested in getting the refinery back up and running. I have tremendous confidence in our team. They have done amazing work to get us to this point. It is a major lift as Mike Bukowski can detail. Any project that a refinery does usually has years of advance work done. When you have an unplanned incident like we had, it creates a much more difficult environment to execute because there is no pre-planning. Our team has just distinguished themselves. Indeed, we have confidence in the plan that we put forward which is to commence startup during the month of December and be up and running in December.

Matt Lucey
Matt Lucey
CEO at PBF Energy

Of course, that requires us doing everything as safely and reliably as we can. If there's a moment in time when we need to take a breath or introduce a bit more time, there's always time for safety. I have complete confidence in the team. We have all our permits in place and I think we just need to let it play out over the next couple months.

Manav Gupta
Manav Gupta
Executive Director at UBS

Perfect, sir. All the best for that. I have come back to one of the comments you made on the call earlier where you said, look, the diffs really started to widen out towards the end of the quarter. Just trying to understand the outlook for the heavy light differentials. I think we all acknowledge PBF is one of the most levered to that trend. If that diff does widen, it will lead to material increase in your capture rates. Help us understand what you're seeing out there. Are there heavier discounted barrels now showing up on the Gulf Coast or other parts of your system, which was not the case even two or three quarters ago? If you could help us talk through that. Thank you.

Matt Lucey
Matt Lucey
CEO at PBF Energy

Absolutely. I'm going to make a couple comments and turn it over to Tom. Look, the market has been constrained. If you go back, you know, starting over four years ago when barrels started getting pulled off the market. When OPEC+ made its deliberate shift going back six months ago, there's simply a lag. Now obviously they made their shift at a moment in time where you're going into peak runs and you're also going into crude burn in the Middle East. Demand is sort of at its highest. In any scenario, there's going to be a lag. Considering the seasonal time that the tapering began, there was probably even more of a lag, one that was a bit frustrating to us. Indeed we are now seeing crude loosened as a result of the OPEC+ moves. Tom?

Tom Nimbley
Tom Nimbley
Chairman at PBF Energy

Yeah, thanks Manav. I mean, kind of just going a little bit further. I think Matt summarized that well, in terms of the peak run environment and the crude burn, and obviously OPEC+'s pivoting in terms of where they've been in terms of their policies, you know, that certainly has shifted the dynamics, you know, as we look at this year. Right. I mean this has been a year where crude stocks have been building, but they've been building in the non-OECD and the Western basin or the Atlantic Basin has been, you know, tight in comparison. You know, stocks are low. We now have seen at this juncture, right, you know, there's enormous amounts of oil that have been pushed out on water. Freight is very expensive. A lot of the oil going on water is clearly something related around some of the sanctions.

Tom Nimbley
Tom Nimbley
Chairman at PBF Energy

Inevitably that oil then needs to come back onshore. When that comes onshore, that sort of is a little bit more of the sustaining aspect of what we've been seeing in the near term in terms of, you know, the widening of the differentials. Because you got cheap, you got cheap tanks available in the U.S., you know, Cushing and PADD 3 are certainly available to be built at far more economic numbers than putting it on a ship at multi-year highs in terms of freight.

Tom Nimbley
Tom Nimbley
Chairman at PBF Energy

I think the last couple comments in terms of barrels that were getting pulled out of the Atlantic Basin to the Pacific, and particularly some LATAM barrels, we are seeing a village and we are buying barrels that we have not bought in several years, and that's coming into our system. I think one of the larger things also to comment is if we were talking about the market a year ago, we would have been talking about obviously the taper and all the different effects, but we would have been talking about underperformance in Brazil. Guyana was just getting its sort of feet under itself.

Tom Nimbley
Tom Nimbley
Chairman at PBF Energy

We've had prolific finds and gains in those areas that are certainly contributing to the dynamics where the crude market, certain dynamics certainly look a little bit better and a lot better, excuse me, in terms of their availabilities, particularly to the coastal regions.

Manav Gupta
Manav Gupta
Executive Director at UBS

Thank you so much.

Operator

Thank you. Your next question comes from Ryan Todd from Piper Sandler. Please go ahead.

Ryan Todd
Ryan Todd
Managing Director at Piper Sandler

Great, thanks. Maybe this might be hard to answer, but maybe it's great news. On the approval of another $250 million installment on the insurance proceeds, is there a way to think about this from a timeline point of view in terms of what it covers or what is kind of what is included in the installments up to this point? Does it cover costs and losses implied through year end under the current plan or through the third quarter? I guess as part of how should we think about the possibility of further meaningful installments in the future?

Matt Lucey
Matt Lucey
CEO at PBF Energy

Yeah, happy to address that to some degree. We don't want, we're not going to get into the detailed accounting or the dissection of it. Here's how I would describe it. In the third quarter, we got a $250 million payment shortly after the quarter. It wasn't in the results. If you look at the third quarter and you take credit for that $250 million that came in just after September 30th, we're a little bit in arrears.

Matt Lucey
Matt Lucey
CEO at PBF Energy

If you pull out more broadly and look at the third quarter, and we had an asset sale of $175 million and you take that out, but then you solve for the insurance payment that came in right after the quarter and you account for us being in a bit of arrears in some insurance collections through the quarter, I look at our operations on a pro forma basis for Q3 as being cash flow positive to the tune of between $100 million and $200 million. In regards to going forward, all I can say is we've had a tremendous relationship with the insurance markets, with the underwriters. I don't know if that can always be said for other companies and other industries and other incidents, but we've had a longstanding relationship with our insurance underwriters.

Matt Lucey
Matt Lucey
CEO at PBF Energy

I was along with our team over in London meeting with the insurance markets over there. We hosted the group here in New Jersey for the U.S. underwriters and we continue to really value the relationship we have with them. There will be some payments out in arrears, but it's very, very manageable.

Ryan Todd
Ryan Todd
Managing Director at Piper Sandler

Thank you, that's helpful. Maybe one, shifting to the RBI program. You've talked a little bit. I'm not sure if I missed this, but can you maybe, congratulations on the progress you've made up to this point. Can you provide a little more color on maybe how much you've been able to capture to date on your OpEx per barrel reduction targets or CapEx run rate targets? What are the big buckets left to achieve as you work towards 2026, you know, kind of target completion on that plan.

Mike Bukowski
Mike Bukowski
Head of Refining at PBF Energy

Okay, thanks for the question. Ryan, this is Mike. As I said, we're on target for the $230 million. I think as of today, we're close to about $210 million of implemented savings on a run-rate basis throughout the course of the year. That's cash. That's not just all OpEx. Roughly think about that, as I said before, 70% OpEx, 30% CapEx. We look real good to finish up the year to hit our goal of $230 million. When we look across the system, remember we just started this in two refineries back in January. There's kind of a time basis of this, but I think across the course of the year up to the third quarter, probably captured order of magnitude about $30 million-$40 million of OpEx and then another $10 million-$15 million of turnaround savings.

Mike Bukowski
Mike Bukowski
Head of Refining at PBF Energy

One thing you may want to take a look at in our earnings release is the third quarter performance of the Delaware City refinery. You'll see that in an area where we had some headwinds on energy prices, the utilization was about the same quarter to quarter and we're showing a reduction in OpEx. We're starting to see it get to the bottom line.

Ryan Todd
Ryan Todd
Managing Director at Piper Sandler

Thanks. Do you think that there's another leg to this process as you think beyond the 2026 completion now that you've, do you, I mean, you're not that far into this process. Is there kind of a second leg entrance that might be visible at this point, that it's more, you know, more upside in the future?

Mike Bukowski
Mike Bukowski
Head of Refining at PBF Energy

Yes, definitely. I tend not to think of this as legs or tranches. I tend to think of this as a continuous improvement journey that never really ends. As I said in my prepared remarks, we added the other refineries in the third quarter to the program. Initially it was just Torrance and Delaware City, and then we're bringing on these other refineries. A large impact in that $210 million has been through the central and just those two refineries. Additional savings will be coming online from the refineries that we added to the program. The way we're doing this, this is not just deferring expenses. This is finding waste, driving efficiency, and eliminating cost. We will spend the time next year going through another, what we call brainstorming or ideation process at all the facilities.

Mike Bukowski
Mike Bukowski
Head of Refining at PBF Energy

One, to ensure we sustain what we have, but also to drive improvement going forward. As I look towards the end of 2026, I see run-rate savings going up to over $350 million.

Operator

Thank you. Your next question comes from Doug Leggate from Wolfe Research.

Doug Leggate
Doug Leggate
Managing Director and Senior Research Analyst at Wolfe Research

Okay, I'll take that. Good morning, everybody. I wonder, Matt, if I could hit on the lower turnaround expenses. I'm wondering, as part of your efficiency drive, do we basically get you referenced Delaware in your remarks just there in the last question, do we think about higher utilization being a new normal? I guess for PBF Energy going forward? It seems to us that the whole industry has managed to shift up its utilization. Obviously, that resets our view of mid cycle free cash flow. We're just wondering if that also applies to you guys.

Mike Bukowski
Mike Bukowski
Head of Refining at PBF Energy

Yeah. Our turnaround program is set up a couple different ways, you know, and in the past we haven't been happy with our performance on cost and schedule. We also have an opportunity to optimize our intervals. We think we'll see a lengthening of intervals for one thing, so that'll allow more runtime. We are working with a third party benchmarking firm to really set our turnaround budgets and schedules going forward. That's how we're going to drive the savings. We would expect to see somewhat shorter duration turnarounds and much more effective turnarounds, which ultimately will turn into higher utilization while the units are up.

Matt Lucey
Matt Lucey
CEO at PBF Energy

In regards to utilization broadly, I sort of think of it maybe in a simple way. I think you have a confluence of a number of events. One is, you know, if you have a winterless winter or if you have a stormless summer, it certainly makes the operating environment easier to operate if you don't have disruptions. We've seen that over the last number of seasons where there's been minimal impact, whether from storms or from harsh winters. You have obviously some creep, whether it's capacity creep, debottlenecking, some increases in throughput. Numerators may be a bit dated. You have this pursuit of operational excellence where everyone is trying to become more efficient and become the best operators they can. In so doing, you're able to increase your reliability and increase your throughput. We are on that journey and we expect it to pay dividends for sure.

Doug Leggate
Doug Leggate
Managing Director and Senior Research Analyst at Wolfe Research

Okay. It seems to be applying. I observed to Phillips and Valero that between them they replaced Lyondell Houston basically with their better utilization. Anyway, I'm grateful for the input, thank you. My follow up, I will add my welcome to Joe and ask him maybe to earn his crust a little bit today. I don't know if this is something you can do, but if we try to simplify all the moving parts on the cost, the money going out the door for the repairs, the insurance proceeds coming in, obviously you took out the short term loan to navigate through this. If we normalize the balance sheet, when all is said and done where do you think your net debt would sit? I'm not talking about contributions from future quarters and so on.

Doug Leggate
Doug Leggate
Managing Director and Senior Research Analyst at Wolfe Research

When you normalize for the money out and the money in, what would your net debt be if you hadn't had this event?

Joe Marino
Joe Marino
CFO at PBF Energy

That's an interesting question. Obviously, there'd be a lot of different factors playing into the market and how our results would be if the event didn't happen. Part of the issuing of that additional, the additional notes earlier this year was in advance of the potential market that we were looking at at that point. Some of that was outside of purely just Martinez related. I think it's hard to specifically answer that question down to a fine detail, but it would be less than it is today, but probably more than, from a net debt standpoint, than entering the year.

Doug Leggate
Doug Leggate
Managing Director and Senior Research Analyst at Wolfe Research

I know it's a tough one to answer. Just to clarify what I'm asking, I'm not looking for the lost opportunity cost. I'm looking for the extraordinary cost and the extraordinary cash inflows from insurance. If those were all taken out, is that a net debt lower number, or can you put a magnitude on it? We're just trying to figure out how much do we deduct from our DCF with your net debt on a normalized basis.

Joe Marino
Joe Marino
CFO at PBF Energy

Yeah, I'd say again, it's hard to put a fine point on that. Obviously, the cost, as we've said before, actual repair costs are going to be substantially covered by our insurance. That really won't have a meaningful impact on our overall net debt on a pro forma or go forward basis. There's impact to the business and our net debt profile from the downtime for sure, and we think a good deal of that will be offset by BI insurance when everything is all said and done. We don't have an exact impact of what that would look like at this point.

Doug Leggate
Doug Leggate
Managing Director and Senior Research Analyst at Wolfe Research

Yeah, I'll take it offline with Colin. Thanks so much, Joe. Thanks again.

Operator

Thank you. The next question comes from Neil Mehta from Goldman Sachs.

Neil Mehta
Neil Mehta
Head of Americas Natural Resources Equity Research at Goldman Sachs

Good morning. Good morning, Matt. Morning, team. There's been a lot of talk about moving product into the West Coast as some of your competitors retire capacity, with three independent projects talked about either into the Southwest or even into California. Just your perspective on whether that can alleviate some of the pressure on PADD 5, and how do you think about timing and potential impacts.

Matt Lucey
Matt Lucey
CEO at PBF Energy

Yeah, thanks Neil. Good to hear from you. In regards to some of the Nelson's project, I'm not going to speculate in regards to which, if any, are going to get to the finish line. I would just say in the base case, in the base case you're going to be very, very expensive. In the base case you're going to take a lot of time. As an observer of the market and as a participant in the market, my guess is that the base case may be aspirational in regards to time and money. I probably tend to take the over on time as nothing is easy. As a result, it's cousin money. I'd probably take the over regardless of how long it takes. There will be substantial tariffs on any new pipes that are built. We continue to think our in-state manufacturing facilities will be the low-cost producer.

Matt Lucey
Matt Lucey
CEO at PBF Energy

The state is going to require imports, whether it comes from the water or from pipe, that will be higher-priced imports. I think with the sort of rebalancing that has happened within California refining, we're very, very well positioned from a product standpoint but also from a crude standpoint. If you have one refinery just came down, one refinery is still scheduled to come down, but you then also have less demand on local crudes as a result. I think our position in California is particularly attractive and interesting going forward. Regardless of the potential pipes, when they come on, how they come on, they will be coming on because it's a product short market.

Neil Mehta
Neil Mehta
Head of Americas Natural Resources Equity Research at Goldman Sachs

All right, thanks, Matt. Good color. Early thoughts on 2026 CapEx, recognizing we're going to get a little bit more color in Q4, and you guys have done a good job keeping a lid on spend this year. How do you think about some of the moving pieces as you move into 2026, and is there a soft number that we should be thinking about penciling in, recognizing we're going to get a harder number on the Q4 call?

Matt Lucey
Matt Lucey
CEO at PBF Energy

Yeah, I would keep to our schedule on that. We do have a heavy turnaround season next year, but we'll get into that normal course, Neil.

Neil Mehta
Neil Mehta
Head of Americas Natural Resources Equity Research at Goldman Sachs

Thanks Matt.

Operator

Thank you. The next question comes from Philip Jungwirth from BMO.

Philip Jungwirth
Philip Jungwirth
Managing Director at BMO

I was hoping you could just talk to what you're seeing this month in the SoCal market, just given the moving pieces With Phillips LA closing down two weeks ago, are you seeing any benefit here? Obviously, we had the unplanned downtime which really helped yet, along with other product prices.

Mike Bukowski
Mike Bukowski
Head of Refining at PBF Energy

It's hard to tell what the impact of Phillips is because there is a tremendous amount of unplanned outages that are going on currently. As you highlighted, the market's quite dynamic on everything: gasoline, jet fuels, and distillates. It's hard to judge what impact the overall markets have with just Phillips going down by itself. There is a fair amount of planned and unplanned events going on on the West Coast. It is what we call an all-bid market.

Matt Lucey
Matt Lucey
CEO at PBF Energy

Yeah. In regards to just pulling yourself out of like the prompt screen, it is hugely impactful. There's going to be 100,000 barrels a day less of gasoline per million in the LA region that now has to be imported from outside the state. Obviously, a significant amount of California crudes are no longer going to be procured by that refinery, and those crudes only home is with California refineries. It will play out. The refinery literally shut, I think, two weeks ago, and there's been lots of sort of activity in the marketplace not related to the shutdown. It's hard to unpack exactly, but over time I think our position in California will prove out to be pretty compelling.

Philip Jungwirth
Philip Jungwirth
Managing Director at BMO

Okay, great. With California now at least trying to stem the decline of local crude production, issuing permits, how optimistic are you? That this could give benefit to PBF Energy. Are in-state refiners at least no longer a headwind with declining production?

Matt Lucey
Matt Lucey
CEO at PBF Energy

Yes, my old joke is, you know, as a refining business, we're all big boys and we generally, we don't ask for help, you simply ask, stop bashing us in the head with a shovel. Systematically shutting in crude production was a significant headwind. I think with all that's going on in California, there's a recognition that that wasn't the single greatest policy to have in place and fixes have been put in place. I think it's a removal of a headwind. It will allow certainly the valley in California to stem declines. My other thing is, you find yourself in a hole, the first thing you do is stop digging. Hopefully we can have declines, you know, arrested. Whether the valley grows, I can't comment on, but simply is a very, very positive step to get that legislation through.

Matt Lucey
Matt Lucey
CEO at PBF Energy

We work very, very closely with all the parties in Sacramento. It is hugely beneficial to have it in place because the alternative was very poor. Our team has worked unbelievably and has worked in concert with a number of the constituents in Sacramento, whether it's the CEC, the governor's office, with legislators. I think everyone appreciates the importance of supplying reliable, deliverable, affordable energy to the people of California. They desperately need gasoline and diesel and jet fuel at affordable prices.

Philip Jungwirth
Philip Jungwirth
Managing Director at BMO

Thanks.

Operator

The next question comes from Matthew Blair from Piper Sandler.

Matthew Blair
Equity Research Analyst at TPH

Thank you and good morning everyone. Could you talk about your outlook for refining capture in the fourth quarter? It seems like it could take a big step up. I think you already mentioned that food discs are trending a little bit wider. It seems like other factors might be moving in your favor. Less maintenance, less turnaround expense, better market structure, better jet versus diesel spreads, lower RINs. Pretty much everything across the board seems to be moving in your favor. I think you're in the mid 30% range on capture in Q3. Do you think something north of 40% is realistic for the fourth quarter?

Matt Lucey
Matt Lucey
CEO at PBF Energy

We agree with everything you said. Bringing on staff. Look, I think it's very constructive. Look ahead.

Matt Lucey
Matt Lucey
CEO at PBF Energy

Crude differentials is the single largest thing, there's no question about it. I think they're set to continually improve over the quarter. RINs is a tough one in regards to. They have been relatively stable in regards to RIN prices. RIN prices are eventually going to have to move up, but of course that goes to the cost to import as well. If you look at the marketplace at the moment, it's pretty interesting. European gasoline is pricing higher than the U.S. not only for today, but out on the strip. That's true for Asia as well. It sets up a constructive environment. Whereas either European prices have to come down and we don't see that in the short term, or North America Atlantic basin, you know, PADD 1 prices have to increase to attract those imports. Everything he said we agree with in regards to improved marketplace.

Matthew Blair
Equity Research Analyst at TPH

Sounds good. Earlier you mentioned some of the challenges in the renewable diesel space. One of your competitors just threw in the towel on RD. Do you have any thoughts to shutting down your RD plant or what's the thinking there?

Matt Lucey
Matt Lucey
CEO at PBF Energy

Our thinking is that it has been a challenging market, but unlike others, we view our asset as a top quartile asset. I think there's a lot to juggle in regards to RD. You've had an administration change where the whole focus of the program has shifted from a low carbon intensity incentive to reduce low carbon fuels to the new administration which is really focused on increasing soybean production and use. That change is more than a subtle one and it's going to put a number of assets in a pickle.

Matt Lucey
Matt Lucey
CEO at PBF Energy

You couple that with the new rules where, you know, imported feeds have a penalty, imported RD doesn't get the producers tax credit. There's a lot to play out in it. Much of it points most likely to higher RIN prices. By the way, higher RIN prices not only because you need to create an environment that makes it economic to manufacture renewable diesel, but also as supply comes off, you have an RVO that's not going to decline. I do think RIN prices, there's a risk for higher RIN prices and hopefully the administration understands that. They're taking comment now on reallocation and such, but you know where we sit. It's no doubt been a very difficult market, but our location and the capabilities that we have at our plant I think sets us apart from a number of the other participants.

Matthew Blair
Equity Research Analyst at TPH

Great. Thanks for your comments.

Operator

Thank you. Your final question comes from Conor Fitzpatrick from [BofA]. Please go ahead.

Matt Lucey
Matt Lucey
CEO at PBF Energy

I'm not sure.

Conor Fitzpatrick
Conor Fitzpatrick
VP at BofA

Hi. Hi. Sorry, it might have been a mix up there. Good morning. Thanks for taking my questions. I apologize if some of this has been touched on before, but we're hearing that the vessels that need to be installed at Martinez have a 60 day time frame to install and construct. Have those arrived at the Martinez site yet? We think they also need to be inspected and blessed by Bay Area Air Quality Management, EPA, and OSHA. Can federal sign off be done during the government shutdown? I know you mentioned permitting before. Should there be any further issues as it relates to shutdown and oversight, and more broadly, can you break down the timeline of equipment left to be received, authority to construct, shutdown impacts on that, and time to place all the equipment into service? Thanks.

Matt Lucey
Matt Lucey
CEO at PBF Energy

All right, look, I'm aware maybe there was some fake news or stories. I would suggest everyone focus on what the company's official comments are. I'm not entirely sure where you're getting some of your information, but as I said, we have all of our permits to construct. We have a very good relationship with not only the state but with the county in regards to get us to the finish line. We have our plan again to commence restart in December, which takes into consideration everything that is required. We're certainly not going to get into explicit details despite you being announced as a PBF person, not a PBF employee. You are not going to get into explicit details on exactly what equipment is being restarted when. We have a very thoughtful and deliberate plan to restart the equipment and we'll have all the approvals necessary to do that.

Conor Fitzpatrick
Conor Fitzpatrick
VP at BofA

Thanks. That's very clear. I guess I should correct and say that I'm from Bank of America. I think there would be. If you couldn't tell. I don't know, thank you. That's the only question I had.

Matt Lucey
Matt Lucey
CEO at PBF Energy

I appreciate the question and hopefully there shouldn't be any confusion in regards to it. As Mike stated, we'll always make time for safety. We've got a very, very good plan to get the plan up and running. With that, I believe that concludes our questions. I greatly appreciate everyone's time and attention and look forward to very constructive markets. Looking forward. Thank you.

Operator

This concludes today's conference. You may now disconnect your lines at this time. Thank you for your participation.

Executives
    • Colin Murray
      Colin Murray
      VP of Investor Relations
    • Joe Marino
      Joe Marino
      CFO
    • Mike Bukowski
      Mike Bukowski
      Head of Refining
    • Tom Nimbley
      Tom Nimbley
      Chairman
    • Matt Lucey
      Matt Lucey
      CEO
Analysts
    • Ryan Todd
      Managing Director at Piper Sandler
    • Conor Fitzpatrick
      VP at BofA
    • Doug Leggate
      Managing Director and Senior Research Analyst at Wolfe Research
    • Matthew Blair
      Equity Research Analyst at TPH
    • Manav Gupta
      Executive Director at UBS
    • Philip Jungwirth
      Managing Director at BMO
    • Neil Mehta
      Head of Americas Natural Resources Equity Research at Goldman Sachs
Powered by Quartr