Crude Oil ( ) Brent Crude ( ) Natural Gas ( ) S&P 500 ( ) PHLX Oil ( )
Current PBF Stock Info

PBF purchases Chalmette Refinery and other assets for $322 million

PBF Energy (ticker: PBF) announced today that its subsidiary has signed an agreement to purchase Chalmette Refining, LLC in New Orleans, Louisiana for $322 million plus working capital including inventory to be valued at closing, according to a company press release.  The purchase includes the refinery, which has a 189 MBOPD throughput capacity, and related logistics assets from ExxonMobil (ticker: XOM) and PDV Chalmette, LLC.

The transaction is expected to be 20% accretive to 2016 consensus earnings in the first year of operation and is expected to close prior to year-end 2015. PBF said that it does not expect to issue equity to finance any portion of the deal.

“Upon completion, we will have increased our refining capacity by 35% and added meaningful Gulf Coast assets to our businesses,” said Tom Nimbley, PBF Chief Executive Officer. “We will have operations in the Gulf Coast, Mid-Continent and East Coast and have diversified and increased our commercial footprint and flexibility.”

The Chalmette Refinery is a dual-train coking refinery with a Nelson Complexity of 12.7 and is capable of processing both light and heavy crude oil. The facility is located on the Gulf Coast, offering flexible raw material sourcing and product distribution opportunities, including exports.

Source: XOM

Source: XOM

In addition to the refining assets, the deal includes 100% ownership of the MOEM Pipeline, providing access to the Empire Terminal, as well as the CAM Connection Pipeline, providing access to the LOOP facility through a third party pipeline. PBF will also receive 80% ownership in each of the Collins Pipeline Company and T&M Terminal Company, both located in Collins, Mississippi. The deal also includes a marine terminal capable of importing waterborne feedstocks and loading or exporting finished products; a clean products truck rack which provides access to local markets; and a crude and product storage facility with approximately 7.5 million barrels of shell capacity.

PBF estimates the acquired MLP-qualifying pre-tax earnings from the logistics assets of Chalmette Refining, LLC, to be at least $30 million. A note from Wells Fargo Equity Research viewed the deal as a positive move for the company, saying that “after adjusting for the MLP drop-down potential ($30 million of EBITDA and a 10x EV/EBITDA)” that the deal was consistent with the company’s goal of buying assets at attractive valuations.

Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.