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What changed in PBF Energy Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of PBF Energy Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+446 added−499 removedSource: 10-K (2024-02-15) vs 10-K (2023-02-16)

Top changes in PBF Energy Inc.'s 2023 10-K

446 paragraphs added · 499 removed · 340 edited across 5 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

117 edited+34 added−27 removed182 unchanged
Biggest changeFurthermore, a protracted conflict between Ukraine and Russia, or any escalation of that conflict, may result in additional financial and economic sanctions and import and/or export controls imposed on Russia by the United States, the UK, the EU, Canada and others, such as the recent EU ban on oil products from Russia effective February 5, 2023, which may have adverse impacts on the wider global economy and market conditions and could, in turn, have a material adverse impact on our business, financial condition, cash flows and results of operations and could cause the market value of PBF Energy’s Class A common stock to decline. 39 Any further political instability, military strikes, sustained military campaigns, terrorist activity, changes in foreign policy in areas or regions of the world where we acquire crude oil and other raw materials or sell our refined products may affect our business in unpredictable ways, including forcing us to increase security measures and causing disruptions of supplies and distribution markets.
Biggest changeFurthermore, a protracted conflict between Ukraine and Russia, or any escalation of this conflict, may result in additional financial and economic sanctions and import and/or export controls imposed on Russia by the United States, the UK, the EU, Canada and others, such as the United States ban on import of Russian oil effective March 8, 2022 and the EU ban on oil products from Russia effective February 5, 2023, which may have adverse impacts on the wider global economy and market conditions and could, in turn, have a material adverse impact on our business, financial condition, cash flows and results of operations and could cause the market value of PBF Energy’s Class A common stock to decline.
However, the N-79-20 Order would still allow used internal combustion engine vehicles to be used and sold after these dates. In an effort to accomplish the 2035 goal, on August 25, 2022, the CARB voted unanimously to adopt the Advanced Clean Cars II (“ACCII”) regulations.
However, the N-79-20 Order would still allow used internal combustion engine vehicles to be used and sold after these dates. In an effort to accomplish the 2035 goal, on August 25, 2022, CARB voted unanimously to adopt the Advanced Clean Cars II (“ACCII”) regulations.
Under these laws, we may incur liability or be required to pay penalties for past contamination, and third parties may assert claims against us for damages allegedly arising out of any past or future contamination.
Under these laws, we may incur liability or be required to pay penalties for past contamination, and third parties may assert claims against us for damages allegedly arising out of any past or future contamination.
As a result of inflation, which may continue, we expect to encounter higher increases in the cost of feedstocks, labor, materials, and other inputs necessary in the refining of crude oil and other feedstocks.
As a result of inflation, which may continue, we expect to continue to encounter higher increases in the cost of feedstocks, labor, materials, and other inputs necessary in the refining of crude oil and other feedstocks.
Risks associated with acquisitions include those relating to the diversion of management time and attention from our existing business, liability for known or unknown environmental conditions or other contingent liabilities and greater than anticipated expenditures required for compliance with environmental, safety or other regulatory standards or for investments to improve operating results, and the incurrence of additional indebtedness to finance acquisitions or capital expenditures relating to acquired assets.
Risks associated with acquisitions and other investments include those relating to the diversion of management time and attention from our existing business, liability for known or unknown environmental conditions or other contingent liabilities and greater than anticipated expenditures required for compliance with environmental, safety or other regulatory standards or for investments to improve operating results, and the incurrence of additional indebtedness to finance acquisitions or capital expenditures relating to acquired assets.
This scrutiny, coupled with changes in consumer behavior, attitudes and preferences with respect to the generation and consumption of energy and the use of fossil fuels, may continue to result in (a) the enactment of climate change related regulations, policies and initiatives, including alternative energy requirements, (b) further technological advances related to the generation, storage and consumption of energy through alternative methods such as wind and solar and (c) increased demand for and/or availability of non-fossil fuel energy sources and related consumer products such as electric vehicles and renewable power supplies.
This scrutiny, coupled with changes in consumer behavior, attitudes and preferences with respect to the generation and consumption of energy and the use of fossil fuels, may continue to result in (a) the enactment of climate change related regulations, policies and initiatives, including alternative energy requirements, (b) further technological advances related to the generation, storage and consumption of energy through alternative methods such as wind and solar and (c) increased demand for and/or availability of non-fossil fuel energy sources and related consumer products such as electric and hybrid vehicles and renewable power supplies.
Holders of Class A common stock are not entitled to preemptive rights or other protections against dilution. Because our decision to issue securities in any future offering will depend on our capital needs as well as market conditions and other factors beyond om control, we cannot predict or estimate the amount, timing, nature or impact of future issuances, if any.
Holders of Class A common stock are not entitled to preemptive rights or other protections against dilution. Because our decision to issue securities in any future offering will depend on our capital needs as well as market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing, nature or impact of future issuances, if any.
Even where we have insurance in place, there can be no assurance that the carriers will honor their obligations under the policies. Our refineries are subject to interruptions of supply and distribution, including due to severe weather events, as a result of our reliance on pipelines and railroads for transportation of crude oil and refined products.
Even where we have insurance in place, there can be no assurance that the carriers will honor their obligations under the policies. 30 Our refineries are subject to interruptions of supply and distribution, including due to severe weather events, as a result of our reliance on pipelines and railroads for transportation of crude oil and refined products.
Our operations also may give rise to federal, state or local government enforcement proceedings alleging non-compliance with applicable laws or regulations. 35 We operate in jurisdictions where very large and unpredictable punitive damage awards may occur in the context of litigation. Private plaintiffs may also initiate legal action against us for alleged environmental impacts.
Our operations also may give rise to federal, state or local government enforcement proceedings alleging non-compliance with applicable laws or regulations. We operate in jurisdictions where very large and unpredictable punitive damage awards may occur in the context of litigation. Private plaintiffs may also initiate legal action against us for alleged environmental impacts.
These provisions may deter a potential sale of our Company to a third-party and may otherwise make it less likely that a third-party would enter into a change of control transaction with us. 49 Moreover, payments under the Tax Receivable Agreement will be based on the tax reporting positions that PBF Energy determines in accordance with the Tax Receivable Agreement.
These provisions may deter a potential sale of our Company to a third-party and may otherwise make it less likely that a third-party would enter into a change of control transaction with us. Moreover, payments under the Tax Receivable Agreement will be based on the tax reporting positions that PBF Energy determines in accordance with the Tax Receivable Agreement.
As a result, we could also experience fluctuating compliance costs in the future if the volumes finalized by EPA differ from what has been proposed. 31 We may have capital needs for which our internally generated cash flows and other sources of liquidity may not be adequate.
As a result, we could also experience fluctuating compliance costs in the future if the volumes finalized by EPA differ from what has been proposed. We may have capital needs for which our internally generated cash flows and other sources of liquidity may not be adequate.
In 2022, record refining industry profits have raised the concern of many public policy experts and federal and state policymakers, who have questioned whether these profits were justified, or whether they constituted a “windfall” to the industry and have proposed legislation that if enacted could adversely affect our profitability.
Beginning in 2022, record refining industry profits raised the concern of many public policy experts and federal and state policymakers, who have questioned whether these profits were justified, or whether they constituted a “windfall” to the industry and have proposed legislation that if enacted could adversely affect our profitability.
In addition, the fixed income markets could experience periods of extreme volatility that may negatively impact market liquidity conditions. As a result, the cost of raising money in the debt and equity capital markets could increase substantially at times while the availability of funds from those markets diminishes significantly.
In addition, the fixed income and bank markets could experience periods of extreme volatility that may negatively impact market liquidity conditions. As a result, the cost of raising money in the debt and equity capital markets could increase substantially at times while the availability of funds from those markets diminishes significantly.
Over time, our refineries or certain refinery units may become obsolete, or be unable to compete, because of the construction of new, more efficient facilities by our competitors. 41 We must make substantial capital expenditures on our operating facilities to maintain their reliability and efficiency.
Over time, our refineries or certain refinery units may become obsolete, or be unable to compete, because of the construction of new, more efficient facilities by our competitors. We must make substantial capital expenditures on our operating facilities to maintain their reliability and efficiency.
If the payment of our debt is accelerated, defaults under our other debt instruments, if any, may be triggered, and our assets may be insufficient to repay such debt in full. Provisions in our indentures and other agreements could discourage an acquisition of us by a third-party.
If the payment of our debt is accelerated, defaults under our other debt instruments, if any, may be triggered, and our assets may be insufficient to repay such debt in full. 47 Provisions in our indentures and other agreements could discourage an acquisition of us by a third-party.
Any increased costs or reduced demand could materially and adversely affect our business and results of operations. 34 Environmental clean-up and remediation costs of our sites and environmental litigation, including related to climate change, could decrease our net cash flow, reduce our results of operations and impair our financial condition.
Any increased costs or reduced demand could materially and adversely affect our business and results of operations. Environmental clean-up and remediation costs of our sites and environmental litigation, including related to climate change, could decrease our net cash flow, reduce our results of operations and impair our financial condition.
The effect of changes in crude oil prices on our refining margins therefore depends in part on how quickly and how fully refined product prices adjust to reflect these changes. The nature of our business has required us to maintain substantial crude oil, feedstock and refined product inventories.
The effect of changes in crude oil prices on our refining margins therefore depends in part on how quickly and how fully refined product prices adjust to reflect these changes. 28 The nature of our business has required us to maintain substantial crude oil, feedstock and refined product inventories.
Our operations are also subject to extensive laws and regulations relating to occupational health and safety. 32 We cannot predict what additional environmental, health and safety legislation or regulations may be adopted in the future, or how existing or future laws or regulations may be administered or interpreted with respect to our operations.
Our operations are also subject to extensive laws and regulations relating to occupational health and safety. We cannot predict what additional environmental, health and safety legislation or regulations may be adopted in the future, or how existing or future laws or regulations may be administered or interpreted with respect to our operations.
The market price of PBF Energy Class A common stock has in the past been and may continue to be highly volatile and subject to wide fluctuations due to a number of factors including: • market conditions in the oil refining industry and volatility in commodity prices; • changes in, or failure to meet, earnings estimates of securities analysts; • variations in actual or anticipated operating results or dividends, if any, to stockholders; • the impact of disruptions to crude or feedstock supply to any of our refineries, including disruptions due to problems with third-party logistics infrastructure; • litigation and government investigations; • the timing and announcement of any potential acquisitions or divestitures and subsequent impact of any future acquisitions or divestitures on our capital structure, financial condition or results of operations; • changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof; • general economic and stock market conditions; and • the availability for sale, or sales by PBF Energy or its senior management, of a significant number of shares of its Class A common stock in the public market.
The market price of PBF Energy Class A common stock has in the past been and may continue to be highly volatile and subject to wide fluctuations due to a number of factors including: • market conditions in the oil refining industry and volatility in commodity prices; • changes in, or failure to meet, earnings estimates of securities analysts; • variations in actual or anticipated operating results or dividends, if any, to stockholders; • the impact of disruptions to crude or feedstock supply to any of our refineries or our Renewable Diesel Facility, including disruptions due to problems with third-party logistics infrastructure; • litigation and government investigations; • the timing and announcement of any potential acquisitions or divestitures and subsequent impact of any future acquisitions or divestitures on our capital structure, financial condition or results of operations; • changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof; • general economic and stock market conditions; and • the availability for sale, or sales by PBF Energy or its senior management, of a significant number of shares of its Class A common stock in the public market.
We may not be able to obtain funding on acceptable terms or at all because of volatility and uncertainty in the credit and capital markets. This may hinder or prevent us from meeting our future capital needs.
We may not be able to obtain funding on acceptable terms or at all, including because of volatility and uncertainty in the credit and capital markets. This may hinder or prevent us from meeting our future capital needs.
As a result, the effectiveness of our hedging strategy could have a material impact on our financial results. See “Item 7A. Quantitative and Qualitative Disclosures About Market Risk.” 44 In addition, these hedging activities involve basis risk.
As a result, the effectiveness of our hedging strategy could have a material impact on our financial results. See “Item 7A. Quantitative and Qualitative Disclosures About Market Risk.” In addition, these hedging activities involve basis risk.
Accordingly, payments under the Tax Receivable Agreement may be made years in advance of the actual realization, if any, of the anticipated future tax benefits and may be significantly greater than the actual benefits PBF Energy realizes in respect of the tax attributes subject to the Tax Receivable Agreement.
Accordingly, payments under the Tax Receivable 49 Agreement may be made years in advance of the actual realization, if any, of the anticipated future tax benefits and may be significantly greater than the actual benefits PBF Energy realizes in respect of the tax attributes subject to the Tax Receivable Agreement.
PBF Energy is party to a Tax Receivable Agreement that provides for the payment from time to time by PBF Energy to the current and former holders of PBF LLC Series A Units and PBF LLC Series B Units of 85% of the benefits, if any, that PBF Energy is deemed to realize as a result of (i) the increases in tax basis resulting from its acquisitions of PBF LLC Series A Units, including such acquisitions in connection with its prior offerings or in the future and (ii) certain other tax benefits related to its entering into the Tax Receivable Agreement, including tax benefits attributable to payments under the Tax Receivable Agreement.
PBF Energy is party to a Tax Receivable Agreement that provides for the payment from time to time by PBF Energy to the current and former holders of PBF LLC Series A Units and PBF LLC Series B Units, or other permitted assignees, of 85% of the benefits, if any, that PBF Energy is deemed to realize as a result of (i) the increases in tax basis resulting from its acquisitions of PBF LLC Series A Units, including such acquisitions in connection with its prior offerings or in the future and (ii) certain other tax benefits related to its entering into the Tax Receivable Agreement, including tax benefits attributable to payments under the Tax Receivable Agreement.
A narrowing of the WTI/Dated Brent differential may result in our Toledo refinery losing a portion of its crude oil price advantage over certain of our competitors, which negatively impacts our profitability.
A narrowing of the WTI/Dated Brent differential may result in our Toledo refinery losing a portion of its crude oil price advantage over certain 29 of our competitors, which negatively impacts our profitability.
Upon the occurrence of certain transactions constituting a “change of control” as described in the indentures governing the 2025 Senior Notes and the 2028 Senior Notes, holders of our notes could require us to repurchase all outstanding notes at 101% of the principal amount thereof, plus accrued and unpaid interest, if any, at the date of repurchase.
Upon the occurrence of certain transactions constituting a “change of control” as described in the indentures governing the 2028 Senior Notes and the 2030 Senior Notes, holders of our notes could require us to repurchase all outstanding notes at 101% of the principal amount thereof, plus accrued and unpaid interest, if any, at the date of repurchase.
We may also enter into transition services agreements in the future with sellers of any additional refineries we acquire. Such services may not be performed timely and effectively, and any significant disruption in such transition services or unanticipated costs related to such services could adversely affect our business and results of operations.
We may also enter into transition services agreements in the future with sellers of any additional refineries we acquire or otherwise invest in. Such services may not be performed timely and effectively, and any significant disruption in such transition services or unanticipated costs related to such services could adversely affect our business and results of operations.
For example, these members may have different tax positions which could influence their positions, including regarding whether and when we dispose of assets and whether and when we incur new or refinance existing indebtedness, especially in light of the existence of the Tax Receivable Agreement.
For example, these members may have different tax positions that could influence their positions, including regarding whether and when we dispose of assets and whether and when we incur new or refinance existing indebtedness, especially in light of the existence of the Tax Receivable Agreement.
Anti-takeover and certain other provisions in our certificate of incorporation and bylaws and Delaware law may discourage or delay a change in control. Our certificate of incorporation and bylaws contain provisions which could make it more difficult for stockholders to effect certain corporate actions.
Anti-takeover and certain other provisions in our certificate of incorporation and bylaws and Delaware law may discourage or delay a change in control. Our certificate of incorporation and bylaws contain provisions that could make it more difficult for stockholders to effect certain corporate actions.
Failure by one or more insurers to honor its coverage commitments for an insured event could materially and adversely affect our future cash flows, operating results and financial condition. Our business currently consists of owning and operating six refineries and related assets, as well as logistics terminals, pipelines and other facilities.
Failure by one or more insurers to honor its coverage commitments for an insured event could materially and adversely affect our future cash flows, operating results and financial condition. Our business currently consists of owning and operating six refineries and related assets, as well as logistics terminals, pipelines and other facilities and our investment in SBR.
If any such litigation were to be initiated against us, at a minimum, we would incur legal and other expenses to defend such lawsuits, which amounts may be significant.
If any such litigation were to be initiated against us, at a minimum, we would incur legal and other expenses to defend such lawsuits, which amounts could be significant.
The level of our indebtedness has several important consequences for our future operations, including that: • a portion of our cash flow from operations will be dedicated to the payment of principal of, and interest on, our indebtedness and will not be available for other purposes; • under certain circumstances, covenants contained in our existing debt arrangements limit our ability to borrow additional funds, dispose of assets and make certain investments; • in certain circumstances these covenants also require us to meet or maintain certain financial tests, which may affect our flexibility in planning for, and reacting to, changes in our industry, such as being able to take advantage of acquisition opportunities when they arise; • our ability to obtain additional financing for working capital, capital expenditures, acquisitions, general corporate and other purposes may be limited; and • we may be at a competitive disadvantage to those of our competitors that are less leveraged; and we may be more vulnerable to adverse economic and industry conditions. 45 Our indebtedness increases the risk that we may default on our debt obligations, certain of which contain cross-default and/or cross-acceleration provisions.
The level of our indebtedness has several important consequences for our future operations, including that: • a portion of our cash flow from operations will be dedicated to the payment of principal of, and interest on, our indebtedness and will not be available for other purposes; • under certain circumstances, covenants contained in our existing debt arrangements limit our ability to borrow additional funds, dispose of assets and make certain investments; • in certain circumstances these covenants also require us to meet or maintain certain financial tests, which may affect our flexibility in planning for, and reacting to, changes in our industry, such as being able to take advantage of acquisition opportunities when they arise; • our ability to obtain additional financing for working capital, capital expenditures, acquisitions, general corporate and other purposes may be limited; and • we may be at a competitive disadvantage to those of our competitors that are less leveraged; and we may be more vulnerable to adverse economic and industry conditions.
See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our liquidity and financial condition will affect our ability to satisfy any and all of these needs or obligations. We may incur significant liability under, or costs and capital expenditures to comply with, regulatory, environmental and health and safety regulations, which are complex and change frequently.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our liquidity and financial condition will affect our ability to satisfy any and all of these needs or obligations. 32 We may incur significant liability under, or costs and capital expenditures to comply with, regulatory, environmental and health and safety regulations, which are complex and change frequently.
Certain other significant agreements of ours such as our agreement governing the Revolving Credit Facility (the “Revolving Credit Agreement”), Tax Receivable Agreement (as defined below) and the Third Intermediation Agreement with J. Aron also contain provisions related to a change in control that could make it more difficult or expensive for a third-party to acquire us.
Certain other significant agreements of ours such as our agreement governing the Revolving Credit Facility (the “Revolving Credit Agreement”) and the Tax Receivable Agreement (as defined below) also contain provisions related to a change in control that could make it more difficult or expensive for a third-party to acquire us.
As a result, it may be difficult for investors to evaluate the probable impact of significant acquisitions on our financial performance until we have operated the acquired refineries for a substantial period of time. 43 A portion of our workforce is unionized, and we may face labor disruptions that would interfere with our operations.
As a result, it may be difficult for investors to evaluate the probable impact of significant acquisitions or other investments on our financial performance until we have operated the acquired refineries for a substantial period of time. A portion of our workforce is unionized, and we may face labor disruptions that would interfere with our operations.
At December 31, 2022 and December 31, 2021, the replacement value of inventories exceeded the LIFO carrying value, therefore no LCM inventory reserve was recorded.
At December 31, 2023 and December 31, 2022, the replacement value of inventories exceeded the LIFO carrying value, therefore no LCM inventory reserve was recorded.
Because crude oil, feedstock and refined products are commodities, we have no control over the changing market value of these inventories. Our crude oil, feedstock and refined product inventories are valued at the lower of cost or market value under the last-in-first-out (“LIFO”) inventory valuation methodology.
Because crude oil, feedstock and refined products are commodities, we have no control over the changing market value of these inventories. Our crude oil, feedstock and refined product inventories are valued at the LCM value under the last-in-first-out (“LIFO”) inventory valuation methodology.
In addition, it is likely that, when we acquire refineries, we will not have access to the type of historical financial information that we will require regarding the prior operation of the refineries.
In addition, it is likely that, when we acquire or otherwise invest in refineries, we will not have access to the type of historical financial information that we will require regarding the prior operation of the refineries.
In addition, efforts in Canada to control the imbalance between its production and capacity to export crude may continue to result in price volatility and the narrowing of the WTI/WCS differential, which is a proxy for the difference between light U.S. and heavy Canadian crude oil, and may reduce our refining margins and adversely affect our profitability and earnings.
In addition, imbalances between the production and capacity to export crude in Canada may continue to result in price volatility and the narrowing of the WTI/WCS differential, which is a proxy for the difference between light U.S. and heavy Canadian crude oil, and may reduce our refining margins and adversely affect our profitability and earnings.
As protection against these hazards, we maintain insurance coverage against some, but not all, such potential losses and liabilities, including claims against us by third parties relating to our operations and products. We may not be able to maintain or obtain insurance of the type and amount we desire at reasonable rates.
As protection against these hazards, we maintain insurance coverage for our refineries against some, but not all, such potential losses and liabilities, including claims against us by third parties relating to our operations and products. We or SBR may not be able to maintain or obtain insurance of the type and amount desired at reasonable rates.
For example, PBF Holding is generally prohibited under Delaware law from making a distribution to a member to the extent that, at the time of the distribution, after giving effect to the distribution, liabilities of the limited liability company (with certain exceptions) exceed the fair value of its assets, and PBFX is subject to a similar prohibition.
For example, PBF Holding is generally prohibited under Delaware law from making a distribution to a member to the extent that, at the time of the distribution, after giving effect to the distribution, liabilities of the limited liability company (with certain exceptions) exceed the fair value of its assets.
Such delays or cost increases may arise as a result of unpredictable factors in the marketplace, many of which are beyond our control, including: • denial or delay in obtaining regulatory approvals and/or permits; • unplanned increases in the cost of construction materials or labor; • disruptions in transportation of modular components and/or construction materials; • severe adverse weather conditions, natural disasters or other events (such as equipment malfunctions, explosions, fires or spills) affecting our facilities, or those of vendors and suppliers; • shortages of sufficiently skilled labor, or labor disagreements resulting in unplanned work stoppages; • market-related increases in a project’s debt or equity financing costs; and/or • non-performance or force majeure by, or disputes with, vendors, suppliers, contractors or sub-contractors involved with a project.
Such delays or cost increases may arise as a result of unpredictable factors in the marketplace, many of which are beyond our control, including: • denial or delay in obtaining regulatory approvals and/or permits; • unplanned increases in the cost of construction materials or labor; • disruptions in transportation of modular components and/or construction materials; • severe adverse weather conditions, natural disasters or other events (such as equipment malfunctions, explosions, fires or spills) affecting our facilities, or those of vendors and suppliers; • shortages of sufficiently skilled labor, or labor disagreements resulting in unplanned work stoppages; • market-related increases in a project’s debt or equity financing costs; and/or • non-performance or force majeure by, or disputes with, vendors, suppliers, contractors or sub-contractors involved with a project. 42 Our refineries contain many processing units, a number of which have been in operation for many years.
Among other things, these provisions: • authorize the issuance of undesignated preferred stock, the terms of which may be established and the shares of which may be issued without stockholder approval; • prohibit stockholder action by written consent; • restrict certain business combinations with stockholders who obtain beneficial ownership of a certain percentage of our outstanding common stock; • provide that special meetings of stockholders may be called only by the chairman of the Board of Directors, the chief executive officer or the Board of Directors, and establish advance notice procedures for the nomination of candidates for election as directors or for proposing matters that can be acted upon at stockholder meetings; and • provide that our stockholders may only amend our bylaws with the approval of 75% or more of all of the outstanding shares of our capital stock entitled to vote. 50 These anti-takeover provisions and other provisions of Delaware law may have the effect of delaying or deterring a change of control of our company.
Among other things, these provisions: • authorize the issuance of undesignated preferred stock, the terms of which may be established and the shares of which may be issued without stockholder approval; • prohibit stockholder action by written consent; • restrict certain business combinations with stockholders who obtain beneficial ownership of a certain percentage of our outstanding common stock; 50 • provide that special meetings of stockholders may be called only by the chairman of the Board of Directors, the chief executive officer or the Board of Directors, and establish advance notice procedures for the nomination of candidates for election as directors or for proposing matters that can be acted upon at stockholder meetings; and • provide that our stockholders may only amend our bylaws with the approval of 75% or more of all of the outstanding shares of our capital stock entitled to vote.
Record refining industry profits have raised the concern of public policy experts and federal and state policymakers, who have questioned whether these profits are justified, or whether they constituted a “windfall” to the industry and have proposed legislation that if enacted could adversely affect our profitability.
Recent record refining industry profits have raised the concern of public policy experts and federal and state policymakers, who have questioned whether these profits are justified, or whether they constituted a “windfall” to the industry and have enacted or could enact legislation that could adversely affect our operations and our profitability.
Moreover, in each of these instances, PBF Energy would be required to make an immediate payment equal to the present value (at a discount rate equal to the London Interbank Offering Rate (“LIBOR”) plus 100 basis points) of the anticipated future tax benefits (based on the foregoing assumptions).
Moreover, in each of these instances, PBF Energy would be required to make an immediate payment equal to the present value (at a discount rate equal to LIBOR plus 100 basis points) of the anticipated future tax benefits (based on the foregoing assumptions).
Failure to comply with OSHA requirements, including general industry standards, process safety standards and control of occupational exposure to regulated substances, could result in claims against us that could have a material adverse effect on our results of operations, financial condition and the cash flows of the business if we are subjected to significant fines or compliance costs. 42 Product liability and operational liability claims and litigation could adversely affect our business and results of operations.
Failure to comply with OSHA requirements, including general industry standards, process safety standards and control of occupational exposure to regulated substances, could result in claims against us that could have a material adverse effect on our results of operations, financial condition and the cash flows of the business if we are subjected to significant fines or compliance costs.
For example, in September 2016, the state of California enacted Senate Bill 32 which further reduces greenhouse gas emissions targets to 40 percent below 1990 levels by 2030. Two regulations implemented to achieve these goals are Cap-and-Trade and the Low Carbon Fuel Standard (“LCFS”). In 2012, CARB implemented Cap-and-Trade.
For example, in September 2016, the state of California enacted Senate Bill 32, which further reduces greenhouse gas emissions targets to 40 percent below 1990 levels by 2030. Two regulations implemented to achieve these goals are Cap-and-Trade and the LCFS. In 2012, CARB implemented Cap-and-Trade.
These risks are discussed more fully below and include, but are not limited to, the following, any of which could have a material adverse effect on our financial condition, results of operations and cash flows: Risks Relating to Our Business and Industry • The price volatility of crude oil, other feedstocks, blendstocks, refined products and fuel and utility services; • Volatility in commodity prices and refined product demand; • Crude oil differentials and related factors, which fluctuate substantially; • Significant interruptions or casualty losses at any of our refineries and related assets or logistics terminals, pipelines or other facilities; • Interruptions of supply and distribution at our refineries; • Renewable fuels mandates and the cost of RINs; • Existence of capital needs for which our internally generated cash flows and other sources of liquidity may not be adequate; • Regulation of emissions of greenhouse gases and other regulatory, environmental and health and safety regulations; • Completion and successful commencement of commercial operation of the renewable diesel project; • Enhanced scrutiny on ESG matters; • Ability to realize the anticipated benefits of the Merger Transaction; • Rate of inflation and its impacts on supply and demand, pricing, and supply chain disruption; • Actions taken by our competitors, including adjustments to refining capacity or renewable fuels production in response to regulations and market conditions; • Volatility and uncertainty in the credit and capital markets, including as a result of higher interest rates; • Any political instability, including as a result of Russia’s military action in Ukraine, military strikes, sustained military campaigns, terrorist activity, changes in foreign policy, or other catastrophic events; • A cyber-attack on, or other failure of, our technology infrastructure; • Competition from other companies in the refining industry; • Delays or cost increases related to capital spending programs; • Product liability claims, operational liability claims and other material litigation; • Acquisition or integration of new assets into our business; • Labor disruptions that would interfere with our operations; • Discontinuation of employment of any of our senior executives or other key employees; • Our activity in commodity derivatives markets.
These risks are discussed more fully below and include, but are not limited to, the following, any of which could have a material adverse effect on our financial condition, results of operations and cash flows: Risks Relating to Our Business and Industry • The price volatility of crude oil, other feedstocks, blendstocks, refined products and fuel and utility services; • Volatility in commodity prices and refined product demand; • Crude oil differentials and related factors, which fluctuate substantially; • Significant interruptions or casualty losses at any of our refineries and related assets or logistics terminals, pipelines or other facilities owned by us or by SBR; • Interruptions of supply and distribution at our refineries; • Renewable fuels mandates and the cost of RINs; • Existence of capital needs for which our internally generated cash flows and other sources of liquidity may not be adequate; • Regulation related to climate change and emissions of greenhouse gases and other regulatory, environmental and health and safety regulations; • Successful commercial operation of SBR; • Enhanced scrutiny on ESG matters; • Rate of inflation and its impacts on supply and demand, pricing, and supply chain disruption; • Actions taken by our competitors, including adjustments to refining capacity or renewable fuels production in response to regulations and market conditions; • Volatility and uncertainty in the credit and capital markets, including as a result of higher interest rates; • Any political instability, including as a result of Russia’s military action in Ukraine, the outbreak of armed hostilities in the middle east, disruption in international shipping resulting from recent attacks by armed groups on cargo ships in the Red Sea, military strikes, sustained military campaigns, terrorist activity, changes in foreign policy, or other catastrophic events; • A cyber-attack on, or other failure of, our technology infrastructure; • Competition from other companies in the refining or renewable fuels industries; • Delays or cost increases related to capital spending programs; • Product liability claims, operational liability claims and other material litigation; • Acquisition or integration of new assets into our business; • Labor disruptions that would interfere with our operations; • Discontinuation of employment of any of our senior executives or other key employees; • Our activity in commodity derivatives markets.
We may sell equity securities or convertible securities or other derivative securities in the public or private markets if we continue to need capital, and even when conditions or terms are not otherwise favorable, including at prices at or below the then current market price of our shares of Class A common stock.
We may sell equity securities or convertible securities or other derivative securities in the public or private markets to assist in funding our capital needs even when conditions or terms are not otherwise favorable, including at prices at or below the then current market price of our shares of Class A common stock.
PBF Energy ultimately may not receive cash distributions from PBF LLC equal to its share of the taxable income of PBF LLC or even equal to the actual tax due with respect to that income. ITEM 1B. UNRESOLVED STAFF COMMENTS None. ITEM 2. PROPERTIES See “Item 1. Business”. 52
PBF Energy ultimately may not receive cash distributions from PBF LLC equal to its share of the taxable income of PBF LLC or even equal to the actual tax due with respect to that income. ITEM 1B. UNRESOLVED STAFF COMMENTS None. 52
In addition, as many of our facilities are located near coastal areas, rising sea levels may disrupt our ability to operate those facilities or transport crude oil and refined products. Extended periods of such disruption could have an adverse effect on our results of operation. We could also incur substantial costs to protect or repair these facilities.
In addition, as many of our facilities are located near coastal areas, rising sea levels may disrupt our ability to operate those facilities or transport crude oil and refined products. Extended periods of such disruption could have an adverse effect on our results of operation.
If we were to incur a significant liability for which we were not fully insured, it could have a material adverse effect on our financial position. Our insurance program includes a number of insurance carriers.
If we or SBR were to incur a significant liability that was not fully insured, it could have a material adverse effect on our financial position. Our insurance program includes a number of insurance carriers.
In the event any of our refineries is forced to shut down for a significant period of time, it would have a material adverse effect on our earnings, our other results of operations and our financial condition as a whole.
In the event any of our refineries is forced to shut down for a significant period of time, it would have a material adverse effect on our earnings, our other results of operations and our financial condition as a whole. In addition, a shutdown or disruption of our Chalmette refinery could impact the operations of SBR.
We may selectively consider strategic acquisitions in the future within the refining and mid-stream sector based on performance through the cycle, advantageous access to crude oil supplies, attractive refined products market fundamentals and access to distribution and logistics infrastructure.
We may selectively consider strategic acquisitions and other investments in the future within the refining, mid-stream and renewable diesel or alternative energy sectors based on performance through the cycle, advantageous access to crude oil supplies, attractive refined products market fundamentals and access to distribution and logistics infrastructure.
Unlike these competitors, we obtain substantially all of our feedstocks from unaffiliated sources. We are not engaged in the petroleum exploration and production business and therefore do not produce any of our crude oil feedstocks. We do not have a retail business and therefore are dependent upon others for outlets for our refined products.
We are not engaged in the petroleum exploration and production business and therefore do not produce any of our crude oil feedstocks. We do not have a retail business and therefore are dependent upon others for outlets for our refined products.
Product liability and liability arising from our operations are significant risks. Substantial damage awards have been made in certain jurisdictions against manufacturers and resellers of petroleum products based upon claims for injuries and property damage caused by the use of or exposure to various products.
Substantial damage awards have been made in certain jurisdictions against manufacturers and resellers of petroleum products based upon claims for injuries and property damage caused by the use of or exposure to various products.
Although the length and impact of the ongoing military conflict is highly unpredictable, the war in Ukraine has led to market disruptions, including significant volatility in the financial markets and the global macroeconomic and geopolitical environment.
Although the length and impact of these ongoing military conflicts is highly unpredictable, these wars have led to market disruptions, including significant volatility in the financial markets and the global macroeconomic and geopolitical environment.
Risks Related to Our Organizational Structure and PBF Energy Class A Common Stock • PBF Energy’s dependence upon distributions from PBF LLC and its subsidiaries to pay taxes and meet its other obligations; • The rights of other members of PBF LLC may conflict with the interests of PBF Energy Class A common stockholders; • Obligations under the Tax Receivable Agreement, as defined below; 27 • Prospect that dividend payments may not be declared in the future; • Anti-takeover provisions in our certificate of incorporation and bylaws and under Delaware law; • Volatility of our stock price; • Potential dilution of our current stockholders.
Risks Related to Our Indebtedness • Our levels of indebtedness; • Our ability to secure necessary financing on acceptable terms; • Changes in our credit ratings; • Limitations on our operations arising out of restrictive covenants in our debt instruments; • Anti-takeover provisions in our indentures. 27 Risks Related to Our Organizational Structure and PBF Energy Class A Common Stock • PBF Energy’s dependence upon distributions from PBF LLC and its subsidiaries to pay taxes and meet its other obligations; • The rights of other members of PBF LLC may conflict with the interests of PBF Energy Class A common stockholders; • Obligations under the Tax Receivable Agreement, as defined below; • Prospect that dividend payments may not be declared in the future; • Anti-takeover provisions in our certificate of incorporation and bylaws and under Delaware law; • Volatility of our stock price; • Potential dilution of our current stockholders.
Regulation of emissions of greenhouse gases could force us to incur increased capital expenditures and operating costs and could have a material adverse effect on our results of operations and financial condition.
We could also incur substantial costs to protect or repair these facilities. 33 Regulation of emissions of greenhouse gases could force us to incur increased capital expenditures and operating costs and could have a material adverse effect on our results of operations and financial condition.
Additionally, increased attention and scrutiny regarding climate change has resulted in increased investor attention and an increased risk of public and private litigation, which could increase our costs and/or otherwise negatively affect our operations and overall profitability, and cause the market price of our Class A common stock to decline.
These developments may also lead to reduced demand for our products, a reduction in our revenue, higher costs and an overall decrease in our profitability. 38 Additionally, increased attention and scrutiny regarding climate change has resulted in increased investor attention and an increased risk of public and private litigation, which could increase our costs and/or otherwise negatively affect our operations and overall profitability, and cause the market price of our Class A common stock to decline.
Refinancing may not be possible and additional financing may not be available on commercially acceptable terms, or at all. We may not be able to secure necessary financing on acceptable terms, or at all. We currently have notes outstanding with varying maturity dates beginning in 2025 and ending in 2028.
Refinancing may not be possible and additional financing may not be available on commercially acceptable terms, or at all. We may not be able to secure necessary financing on acceptable terms, or at all. We currently have notes outstanding with maturity dates in 2028 and 2030. Additionally, our Revolving Credit Facility matures in 2028.
Changes in law or interpretation of settled law and changes in policy, including with respect to climate change, other environmental regulations or regulations mandating efficiency standards or the use of alternative fuels or uncompetitive fuel components, could adversely affect our operations and results by increasing our cost of compliance, delaying or eliminating available business opportunities and/or preventing or limiting existing operations.
We may be subject to asserted or unasserted claims and governmental regulatory proceedings and inquiries related to the use of PFAS in a variety of jurisdictions. 35 Changes in law or interpretation of settled law and changes in policy, including with respect to climate change, other environmental regulations or regulations mandating efficiency standards or the use of alternative fuels or uncompetitive fuel components, could adversely affect our operations and results by increasing our cost of compliance, delaying or eliminating available business opportunities and/or preventing or limiting existing operations.
While, to date, we have not had a significant cybersecurity breach or attack that had a material impact on our business or results of operations, if we were to be subject to a material successful cyber intrusion, it could result in remediation or service restoration costs, increased cyber protection costs, lost revenues, litigation or regulatory actions by governmental authorities, increased insurance premiums, reputational damage and damage to our competitiveness, financial condition, results of operations and cash flows. 40 Cyber-attacks against us or others in our industry could result in additional regulations, and U.S. government warnings have indicated that infrastructure assets, including pipelines, may be specifically targeted by certain groups.
While, to date, we have not had a significant cybersecurity breach or attack that had a material impact on our business or results of operations, if we were to be subject to a material successful cyber intrusion, it could result in remediation or service restoration costs, increased cyber protection costs, lost revenues, litigation or regulatory actions by governmental authorities, increased insurance premiums, reputational damage and damage to our competitiveness, financial condition, results of operations and cash flows.
Under the Tax Receivable Agreement, PBF Energy is required to pay the former and current holders of PBF LLC Series A Units and PBF LLC Series B Units for certain realized or assumed tax benefits PBF Energy may claim arising in connection with prior offerings and future exchanges of PBF LLC Series A Units for shares of its Class A common stock and related transactions.
See “Certain Relationships and Related Transactions—IPO Related Agreements” in our 2024 Proxy Statement incorporated herein by reference. 48 Under the Tax Receivable Agreement, PBF Energy is required to pay the former and current holders of PBF LLC Series A Units and PBF LLC Series B Units, or other permitted assignees, for certain realized or assumed tax benefits PBF Energy may claim arising in connection with prior offerings and future exchanges of PBF LLC Series A Units for shares of its Class A common stock and related transactions.
Deterioration of general economic conditions or weak demand levels could require additional actions on our part to lower our operating costs, including temporarily or permanently ceasing to operate units at our facilities, as experienced in 2020 when certain assets were temporarily idled as part of the East Coast Refining Reconfiguration. There may be significant incremental costs associated with such actions.
Deterioration of general economic conditions or weak demand levels could require additional actions on our part to lower our operating costs, including temporarily or permanently ceasing to operate units at our facilities. There may be significant incremental costs associated with such actions.
Our ability to do so will be dependent upon a number of factors, including our ability to identify acceptable acquisition candidates, consummate acquisitions on acceptable terms, successfully integrate acquired assets and obtain financing to fund acquisitions and to support our growth and many other factors beyond our control.
Our ability to acquire additional assets or invest in new businesses will be dependent upon a number of factors, including our ability to identify acceptable acquisition or investment opportunities, consummate acquisitions or other investments on acceptable terms, successfully integrate acquired assets and obtain financing to fund acquisitions and to support our growth and many other factors beyond our control.
We have substantial short-term capital needs and may have substantial long-term capital needs. Our short-term working capital needs are primarily related to financing certain of our crude oil and refined products inventory not covered by our various supply agreements and the Third Inventory Intermediation Agreement.
We have substantial short-term capital needs and may have substantial long-term capital needs. Our short-term working capital needs are primarily related to financing certain of our crude oil and refined products inventory.
For example, on July 21, 2021, the board of Bay Area Air Quality Management District (“BAAQMD”) voted to adopt amendments to “Regulation 6-5: Particulate Emissions from Refinery Fluidized Catalytic Cracking Units - 2021 Amendment” (“Rule 6-5 Amendment”) requiring compliance with more stringent standards for particulate emissions from FCC units at refineries in the Bay Area that will be effective in 2026.
For example, MRC is subject to amendments to “Regulation 6-5: Particulate Emissions from Refinery Fluidized Catalytic Cracking Units - 2021 Amendment” (“Rule 6-5 Amendment”) requiring compliance with more stringent standards for particulate emissions from FCC units at refineries in the Bay Area that will be effective in 2026.
Also, these restrictions do not prevent us from incurring obligations that do not constitute indebtedness. Our future credit ratings could adversely affect our business, the cost of our borrowing, and our ability to obtain credit in the future.
To the extent new debt is added to our current debt levels, the leverage risks described above would increase. Also, these restrictions do not prevent us from incurring obligations that do not constitute indebtedness. Our future credit ratings could adversely affect our business, the cost of our borrowing, and our ability to obtain credit in the future.
We may be negatively affected by the rate of inflation and its impact on the global economy. Current inflation within the economy has resulted in increased interest rates and capital costs, contributed to supply shortages, increased the cost of living and labor, and other related items.
Current inflation within the economy has resulted in increased interest rates and capital costs, contributed to supply shortages, increased the cost of living and labor, and other related items.
Such supply and demand are affected by a variety of economic, market, environmental and political conditions. Our direct operating expense structure also impacts our profitability. Our major direct operating expenses include employee and contract labor, maintenance and energy. Our predominant variable direct operating cost is energy, which is comprised primarily of fuel and other utility services.
Our direct operating expense structure also impacts our profitability. Our major direct operating expenses include employee and contract labor, maintenance and energy. Our predominant variable direct operating cost is energy, which is comprised primarily of fuel and other utility services.
Moreover, without adequate funding, we may be unable to execute our growth strategy, complete future acquisitions, take advantage of other business opportunities or respond to competitive pressures, any of which could have a material adverse effect on our revenues and results of operations.
Moreover, without adequate funding, we may be unable to execute our business strategy, complete future acquisitions or growth projects, take advantage of other business opportunities or respond to competitive pressures, any of which could have a material adverse effect on our revenues and results of operations. 39 Any political instability, military strikes, sustained military campaigns, terrorist activity, changes in foreign policy, or other catastrophic events could have a material adverse effect on our business, results of operations and financial condition.
Natural gas prices have historically been volatile and, typically, electricity prices fluctuate with natural gas prices. Future increases in fuel and utility prices may have a negative effect on our refining margins, profitability and cash flows. Our working capital, cash flows and liquidity can be significantly impacted by volatility in commodity prices and refined product demand.
Natural gas prices have historically been volatile and, typically, electricity prices fluctuate with natural gas prices. Future increases in fuel and utility prices may have a negative effect on our refining margins, profitability and cash flows.
In addition, the structuring of future transactions may take into consideration these tax or other considerations even where no similar benefit would accrue to PBF Energy Class A common stockholders or us. See “Certain Relationships and Related Transactions—IPO Related Agreements” in our 2023 Proxy Statement incorporated herein by reference.
In addition, the structuring of future transactions may take into consideration these tax or other considerations even where no similar benefit would accrue to PBF Energy Class A common stockholders or us.
Existing laws and regulations could change, and the minimum volumes of renewable fuels that must be blended with refined petroleum fuels may increase. Because we do not currently produce renewable fuels, increasing the volume of renewable fuels that must be blended into our products displaces an increasing volume of our refinery’s product pool, potentially resulting in lower earnings and profitability.
Because we do not directly produce renewable fuels, increasing the volume of renewable fuels that must be blended into our products could displace an increasing volume of our refinery’s product pool, potentially resulting in lower earnings and profitability .
Additionally, adverse actions taken by the rating agencies on our corporate credit rating or the rating of our notes may increase our cost of borrowings or hinder our ability to raise financing in the capital markets or have an unfavorable impact on the credit terms we have with our suppliers, which could impair our ability to grow our business, increase our liquidity and make cash distributions to our shareholders. 46 Restrictive covenants in our debt instruments, including the indentures governing our notes, may limit our ability to undertake certain types of transactions, which could adversely affect our business, financial condition, results of operations and our ability to service our indebtedness.
Additionally, adverse actions taken by the rating agencies on our corporate credit rating or the rating of our notes may increase our cost of borrowings or hinder our ability to raise financing in the capital markets or have an unfavorable impact on the credit terms we have with our suppliers, which could impair our ability to grow our business, maintain adequate levels of liquidity and make cash distributions to our shareholders.
The potential for such security threats or system failures has subjected our operations to increased risks that could have a material adverse effect on our business. To the extent that these information systems are under our control, we have implemented measures such as virus protection software, emergency recovery processes and a formal disaster recovery plan to address the outlined risks.
To the extent that these information systems are under our control, we have implemented measures such as virus protection software, emergency recovery processes and a formal disaster recovery plan to address the outlined risks.
If we were to incur a significant liability for which we were not fully insured, it could have a material adverse effect on our financial position, results of operations and cash flows. In addition, the proceeds of any such insurance may not be paid in a timely manner and may be insufficient if such an event were to occur.
If we were to incur a significant liability for which we were not fully insured, it could have a material adverse effect on our financial position, results of operations and cash flows.
Certain environmental laws impose strict, and in certain circumstances joint and several liability for, costs of investigation and cleanup of such spills, discharges or releases on owners and operators of, as well as persons who arrange for treatment or disposal of regulated materials at contaminated sites.
Many of these laws and regulations are becoming increasingly stringent, and the cost of compliance with these requirements can be expected to increase over time. 37 Certain environmental laws impose strict, and in certain circumstances joint and several liability for, costs of investigation and cleanup of such spills, discharges or releases on owners and operators of, as well as persons who arrange for treatment or disposal of regulated materials at contaminated sites.
The competition for these employees is intense, and the loss of these executives or employees could harm our business. If any of these executives or other key personnel resigns or becomes unable to continue in his or her present role and is not adequately replaced, our business operations could be materially adversely affected.
If any of these executives or other key personnel resigns or becomes unable to continue in his or her present role and is not adequately replaced, our business operations could be materially adversely affected. 44 Our hedging activities may limit our potential gains, exacerbate potential losses and involve other risks.
If we are unable to refinance our indebtedness or access additional credit, or if short-term or long-term borrowing costs significantly increase, our ability to finance current operations and meet our short-term and long-term obligations could be adversely affected.
If we are unable to refinance our indebtedness or access additional credit, or if short-term or long-term borrowing costs significantly increase, our ability to finance current operations and meet our short-term and long-term obligations could be adversely affected. 46 Despite our level of indebtedness, we and our subsidiaries may be able to incur substantially more debt, which could exacerbate the risks described above.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

12 edited+27 added−16 removed11 unchanged
Biggest changeOn September 22, 2022, the Ninth Circuit issued an order denying Plaintiffs’ petition for permission to file an interlocutory appeal, confirming that the case will proceed with Navarro as the sole plaintiff. On September 27, 2022, the Plaintiff filed a schedule of pretrial and trial dates with a trial date of July 18, 2023, which was approved by the Court.
Biggest changeThe order provided that the case will proceed with Navarro as the sole plaintiff. On September 22, 2022, the Ninth Circuit Court of Appeals affirmed.
In the Petition/Complaint MRC alleges that: its feasible alternative Particulate Matter (“PM”) reduction proposal that would achieve significant PM reductions while avoiding the significant costs and environmental impacts of the BAAQMD’s adopted PM limit, was improperly removed from consideration and not presented to the BAAQMD Board when the Rule 6-5 Amendment was adopted with the current PM standard; when adopting the Rule 6-5 Amendment, the BAAQMD flagrantly ignored numerous mandatory requirements of the California Environmental Quality Act (“CEQA”) and the California Health and Safety Code; the BAAQMD’s adoption of the Rule 6-5 Amendment also violated California common law; and these failings render the Rule 6-5 Amendment ultra vires, illegal, and unenforceable.
In the Petition/Complaint MRC alleges that: its feasible alternative Particulate Matter (“PM”) reduction proposal, which would achieve significant PM reductions while avoiding the significant costs and environmental impacts of the BAAQMD’s adopted PM limit, was improperly removed from consideration and not presented to the BAAQMD Board when the Rule 6-5 Amendment was adopted with the current PM standard; when adopting the Rule 6-5 Amendment, the BAAQMD flagrantly ignored numerous mandatory requirements of the California Environmental Quality Act (“CEQA”) and the California Health and Safety Code; the BAAQMD’s adoption of the Rule 6-5 Amendment also violated California common law; and these failings render the Rule 6-5 Amendment ultra vires, illegal, and unenforceable.
As the ultimate outcomes of the pending matters discussed above are uncertain, we cannot currently estimate the final amount or timing of their resolution but any such amount is not expected to have a material impact on our financial position, results of operations, or cash flows, individually or in the aggregate. ITEM 4. MINE SAFETY DISCLOSURES None. 55 PART II
As the ultimate outcomes of the pending matters discussed above are uncertain, we cannot currently estimate the final amount or timing of their resolution, but any such amount is not expected to have a material impact on our financial position, results of operations, or cash flows, individually or in the aggregate. ITEM 4. MINE SAFETY DISCLOSURES None. 58 PART II
We held mandatory settlement conferences with the BAAQMD on October 27, 2021 and December 15, 2021. On December 9, 2022, we filed a Motion To Augment/Correct The Administrative Record regarding various documents that the BAAQMD is currently withholding and do not plan to include in the administrative record. On December 30, 2022, the BAAQMD filed its opposition to our motion.
We held mandatory settlement conferences with the BAAQMD on October 27, 2021 and December 15, 2021. On December 9, 2022, MRC filed a Motion to Augment/Correct the Administrative Record regarding various documents that the BAAQMD is currently withholding and do not plan to include in the administrative record.
At the hearing, although the Court partially denied our motion concerning documents where the BAAQMD asserted the attorney client privilege, the Court held that CEQA places a heavy burden on the BAAQMD in justifying withholding documents based on the deliberative privilege.
On February 2, 2023, although the Court partially denied our motion concerning documents where the BAAQMD asserted the attorney client privilege, the Court held that CEQA places a heavy burden on the BAAQMD in justifying withholding documents based on the deliberative privilege.
We presently believe the outcome will not have a material impact on our financial position, results of operations, or cash flows. 54 The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), also known as “Superfund,” imposes liability, without regard to fault or the legality of the original conduct, on certain classes of persons who are considered to be responsible for the release of a “hazardous substance” into the environment.
The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), also known as “Superfund,” imposes liability, without regard to fault or the legality of the original conduct, on certain classes of persons who are considered to be responsible for the release of a “hazardous substance” into the environment.
Exxon Mobil Corporation, et al. , we and PBF LLC, and our subsidiaries, PBF Western Region and Torrance Refining and the manager of our Torrance refinery along with ExxonMobil were named as defendants in a class action and representative action complaint filed on behalf of Arnold Goldstein, John Covas, Gisela Janette La Bella and others similarly situated.
Exxon Mobil Corporation, et al. , we and PBF LLC, and our subsidiaries, PBF Western Region and Torrance Refining and the manager of our Torrance refinery along with ExxonMobil were named as defendants in a class action and representative action complaint.
After considering the parties’ proposed orders, on July 5, 2022, the Court issued a final order ruling that Plaintiffs’ Motion to Substitute Navarro as Class Representative was denied and decertifying both of Plaintiffs’ proposed Air and Ground Subclasses.
On May 5, 2021, the Court granted plaintiffs leave to amend their complaint for the third time to substitute Navarro for Youssef. On July 5, 2022, the Court issued a final order ruling that Plaintiffs’ Motion to Substitute Navarro as Class Representative was denied and decertifying both of Plaintiffs’ proposed Air and Ground Subclasses.
On September 7, 2021, MRC filed a Verified Petition for Writ of Mandate and Complaint for Declaratory and Injunctive Relief against the BAAQMD requesting the Court to declare as invalid, unenforceable, and ultra vires the BAAMQD’s July 21, 2021, adoption of Rule 6-5 Amendment.
We presently believe the outcome of this litigation will not have a material impact on our financial position, results of operations, or cash flows. 56 On September 7, 2021, MRC filed a Verified Petition for Writ of Mandate and Complaint for Declaratory and Injunctive Relief against the BAAQMD requesting the Court to declare as invalid, unenforceable, and ultra vires the BAAMQD’s July 21, 2021, adoption of amendments to Rule 6-5 Amendment.
We presently believe the outcome of this litigation will not have a material impact on our financial position, results of operations, or cash flows.
The motion hearing date is currently scheduled for March 14, 2024. We presently believe the outcome will not have a material impact on our financial position, results of operations, or cash flows.
In addition, in connection with the acquisition of the Torrance refinery and related logistics assets, we purchased a ten-year, $100.0 million environmental insurance policy to insure against unknown environmental liabilities.
In addition, in connection with the acquisition of the Torrance refinery and related logistics assets, we purchased a ten-year, $100.0 million environmental insurance policy to insure against unknown environmental liabilities. We currently have multiple outstanding notices of violation (“NOVs”) issued by regulatory authorities for various alleged regulation and permit violations at our refineries.
At the Court’s request, the parties agreed to a process whereby they will jointly identify approximately 50 of the withheld/redacted documents for the Court to review, and the Court will rule on those documents. The parties will then apply the Court’s ruling to the remainder of the withheld documents.
At the Court’s request, the parties agreed to a process whereby they jointly identified approximately 50 of the withheld/redacted documents for the Court to review. The Court ruled on those documents on February 22, 2023, ordering full disclosure of two types of documents related to the BAAQMD’s cost-estimates for the rule.
Removed
On April 17, 2019, we received a Notice of Violation (“NOV”) from the South Coast Air Quality Management District (“SCAQMD”) relating to Title V deviations alleged to have occurred in second half of 2018. In May 2022, the SCAQMD requested that we present a settlement proposal to resolve the NOV.
Added
It is not possible to predict the outcome of any of these NOVs or the amount of the penalties that will be assessed in connection with any NOV. If any one or more of them were decided against us, we believe that there would be no material effect on our financial position, results of operations, or liquidity.
Removed
On June 16, 2022, we presented a settlement offer of $456,820 to settle the NOV. On July 22, 2022, the SCAQMD presented a counter proposal of $1.2 million. On August 25, 2022, we presented a counter proposal of $736,845. On December 15, 2022, the SCAQMD accepted our counter proposal. The parties are currently drafting the settlement agreement.
Added
SEC regulations require us to disclose certain information about proceedings arising under federal, state, or local provisions regulating the discharge of materials into the environment or protecting the environment if we reasonably believe that such proceedings will result in monetary sanctions of $300,000 or more.
Removed
On February 17, 2017, in Arnold Goldstein, et al. v.
Added
On November 24, 2022, the Martinez refinery experienced a spent catalyst release that is currently being investigated by the BAAQMD, Contra Costa County (“CCC”), the Department of Justice and EPA, and the California Department of Fish and Game (“DFG”).
Removed
On February 5, 2021, our motion for Limited Extension of Discovery Cut-Off and a Motion by plaintiffs for Leave to File Third Amended Complaint were heard by the Court. On May 5, 2021, the Court granted plaintiffs leave to amend their complaint for the third time to substitute Navarro for Youssef.
Added
On July 11, 2023 and October 6, 2023, the Martinez refinery experienced unintentional releases of petroleum coke dust and has received inquiries or notices of investigation from the BAAQMD, the California Department of Industrial Relations, Division of Occupational Safety and Health, the CCC, and the EPA. The BAAQMD has issued 35 NOVs relating to the spent catalyst incident to date.
Removed
On May 12, 2021, plaintiffs filed their Third Amended Complaint (“TAC”) that contained significant changes and new claims, including individual claims, that were not included in the motion for leave to amend plaintiffs presented to the Court. On June 9, 2021, we filed a Motion to Dismiss/Strike the TAC.
Added
The CCC has issued two NOVs related to the spent catalyst incident. The BAAQMD also issued an NOV relating to the July 11, 2023 coke dust incident and an NOV relating to the October 6, 2023 coke dust incident.
Removed
On June 23, 2021, plaintiffs filed their opposition to our Motion to Dismiss/Strike, to which we filed our reply on July 2, 2021. A hearing on the Motion to Dismiss/Strike the TAC was held on August 2, 2021 and the Court ordered that the TAC be struck and that the parties meet and confer with respect to the complaint.
Added
For the spent catalyst incident, the DFG, CCC, and the BAAQMD have referred their findings and/or NOVs issued to date to the CCC District Attorney.
Removed
After meeting and conferring, plaintiffs agreed to submit a corrected TAC with changes reflecting the removal of Youssef and the substitution of Navarro as the named Plaintiff. On August 23, 2021, the Court approved the parties’ stipulation to take Navarro’s deposition on September 23, 2021.
Added
On November 16, 2023, the CCC District Attorney and BAAQMD announced a joint civil enforcement action against us that will include enforcement of claims from the November 24, 2022 spent catalyst release, as well as additional enforcement claims. On December 15, 2023, the BAAQMD issued a NOV related to odors from flaring that occurred on the same date.
Removed
Also, on August 23, 2021, the Court approved the parties’ stipulation to continue the pretrial dates with the new deadlines. On October 8, 2021, plaintiffs filed their Motion to Appoint Navarro as Class Representative. On October 29, 2021, we filed our opposition to this motion. On November 15, 2021, plaintiffs filed their reply.
Added
On December 18, 2023, the BAAQMD issued four NOVs related to a fire incident that occurred on December 17, 2023. For both the spent catalyst, coke dust, flaring and fire incidents, no penalties have been assessed but it is reasonable to expect that, individually or in the aggregate, the amount of such penalties may exceed $300,000.
Removed
On February 8, 2022, the Court held a hearing on plaintiff’s Motion to Appoint Navarro as Class Representative but did not act on the motion. Instead, the Court ordered the parties to submit draft orders for the Court’s consideration.
Added
On September 27, 2023, MRC received from the San Francisco Bay Regional Water Quality Control Board (“RWQCB”) an Administrative Civil Liability (“ACL”) assessment in the amount of $13.8 million for allegedly: (1) exceeding its effluent limitations and discharging to the Carquinez Strait without authorization in October 2022, January 2023, and June 2023; and (2) failing to submit Climate Change Adaptation information.
Removed
The order provided that the 53 case will proceed with Navarro as the sole plaintiff and required the parties to meet and confer and propose a schedule for the remaining pretrial dates and a trial date.
Added
On January 12, 2024, MRC met with the RWQCB to discuss its response to their ACL assessment.
Removed
On July 19, 2022, Plaintiff filed a petition with the Ninth Circuit Court of Appeals seeking permission to appeal the District Court’s decertification order finding that Navarro is an inadequate class representative. Our answer to the petition was filed on July 29, 2022.
Added
Based on the discussions and the information provided by MRC, the RWQCB proposed reducing the ACL assessment to approximately $4.5 million and noted that, for any settlement, 50% of the penalty could be in the form of an Enhanced Compliance Actions settlement (“ECA”), Supplemental Environmental Project (“SEP”), or a combination of the two.
Removed
On January 13, 2023, the Defendants filed a motion for judgment on the pleadings. On January 23, 2023, the Plaintiff filed its opposition to the Defendants’ motion. Defendants’ reply to Plaintiff’s opposition was filed on January 30, 2023. Defendants’ motion was scheduled to be heard by the Court on February 13, 2023.
Added
On January 19, 2024, MRC agreed to accept the reduced ACL, with 50% of the approximately $4.5 million dedicated to an ECA and SEP.
Removed
On February 13, 2023, the Court issued a minute order taking the February 13th hearing off the calendar and under submission. A new hearing date will be scheduled if the Court decides oral argument would be helpful.
Added
Once the parties finalize the settlement agreement and stipulation for entry of administrative civil liability order, it will be presented to the RWQCB’s Board for final approval. 55 On February 17, 2017, in Arnold Goldstein, et al. v.
Removed
On January 12, 2023, we filed our reply to the BAAQMD’s opposition. The hearing on our motion was held on February 2, 2023.
Added
On February 27, 2023, the Court issued an order granting our motion for judgment on the pleadings and dismissed Plaintiff’s trespass claim with prejudice and granted Plaintiff leave to amend his nuisance claims in conformity with the order if he can do so consistent with Rule 11 of the Federal Rules of Civil Procedures.
Removed
If there is still a dispute, the parties will bring the dispute back before the Court. The Court set the writ hearing for September 20, 2023. It is currently expected that the non-disputed portion of the Administrative Record will be lodged with the Court in early February 2023.
Added
On March 27, 2023, Plaintiff filed a Fourth Amended Complaint relating to the remaining nuisance claims. On May 23, 2023, the Court denied our motion to dismiss on the pleadings for Plaintiff’s failure to establish standing to bring the nuisance claims. After completing further discovery, on August 28, 2023, we filed a Motion for Summary Judgment.
Removed
If the Court ultimately grants our motion on the deliberative privilege, the Administrative Record will be augmented. We expect another mandatory settlement conference to be held in first quarter of 2023.
Added
On October 18, 2023, the Court issued an order granting our motion, adjudged that Plaintiff take nothing, and that the action be dismissed with prejudice. The order also allows us to recover the costs of suit pursuant to a bill of costs.
Added
On October 30, 2023, Plaintiff filed a notice of appeal to the Ninth Circuit regarding the Court’s order granting summary judgment. Plaintiff’s opening brief is due March 22, 2024 and our answering brief is due April 22, 2024.
Added
In compliance with the Court’s order, in March 2023, the BAAQMD produced additional or less-redacted versions of previously produced documents. On May 26, 2023, MRC filed its opening brief. The BAAQMD’s opposition brief was filed on July 21, 2023. MRC filed its reply brief on August 18, 2023.
Added
The bench trial scheduled for December 21, 2023, was rescheduled to February 29, 2024. On February 12, 2024, the parties entered a settlement agreement pursuant to which MRC is dismissing its Petition/Complaint and the BAAQMD has approved MRC’s AEMS, to be validated within the first year after the effective date of the rule.
Added
We presently believe the settlement will not have a material impact on our financial position, results of operations, or cash flows. On August 16, 2023, in Joseph Piscitelli and Lara Zanzucchi v.
Added
Martinez Refining Company LLC , our subsidiary MRC was named as a defendant in a class action and representative action complaint which contains allegations of public and private nuisance, trespass, and negligence arising from MRC’s operations. MRC filed its answer to the complaint on October 31, 2023.
Added
The initial Court hearing to discuss discovery issues was held on January 2, 2024. At the hearing, the Court raised the issue of mediation and directed the parties to meet and confer and agree to stipulate to a mediation deadline. On January 9, 2024, the parties filed a stipulation agreeing to consider private mediation by September 20, 2024.
Added
On January 17, 2024, the Court issued a scheduling order setting the class certification hearing for April 10, 2025. The parties are currently engaged in discovery. We presently believe the outcome will not have a material impact on our financial position, results of operations, or cash flows. 57 On December 15, 2023, in Alena Cruz and Shannon Payne vs.
Added
PBF Energy Inc., et. al , we and our subsidiaries PBF Energy Western Region and MRC were named as defendants in a class action and representative action complaint filed by Alena Cruz and Shannon Payne, and on behalf of all others similarly situated.
Added
The complaint contains allegations of Clean Air Act violations, claims for medical and environmental monitoring, liability for ultrahazardous activities, negligence, and public and private nuisance from MRC’s operations.
Added
The proposed class is all individuals who reside and/or work in the City of Martinez, including the surrounding communities of Alhambra Valley and Franklin Canyon, as well as El Sobrante, Hercules, Benicia, and Richmond, who have allegedly been exposed to elevated levels of spent catalyst discharged from MRC’s operations during the period November 24, 2022 to the present.
Added
On December 21, 2023, Plaintiffs granted an extension until February 5, 2024 for MRC to respond to the initial complaint. On February 5, 2024, MRC filed a motion to dismiss on the pleadings. Plaintiffs’ opposition to the motion is due February 16, 2024. MRC’s reply to Plaintiffs’ opposition is due February 23, 2024.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

10 edited+3 added−4 removed7 unchanged
Biggest changeShare Repurchase Program The following table summarizes PBF Energy’s Class A common stock share repurchase activity during the fourth quarter of 2022: Period Total Number of Shares Purchased (1) Average Price Paid per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plan (3) Approximately Dollar Value of Shares that May Yet Be Purchased Under Plan (in millions) December 4,192,555 $ 37.30 4,192,555 $ 343.60 (1) The shares purchased include only those shares that have settled as of the period end date.
Biggest changeShare Repurchase Program The following table summarizes PBF Energy’s Class A common stock share repurchase activity during the fourth quarter of 2023: Period Total Number of Shares Purchased (1) Average Price Paid per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plan (3) Approximately Dollar Value of Shares that May Yet Be Purchased Under Plan (in millions) October 1-31, 2023 993,619 $ 47.50 993,619 $ 413.7 November 1-30, 2023 856,822 $ 44.73 856,822 $ 375.4 December 1-31, 2023 1,485,576 $ 43.26 1,485,576 $ 311.1 Total 3,336,017 $ 44.90 3,336,017 $ 311.1 (1) The shares purchased include only those shares that have settled as of the period end date.
The declaration, amount and payment of any future dividends on shares of PBF Energy Class A common stock will be at the sole discretion of PBF Energy’s Board of Directors, and we are not obligated under any applicable laws, our governing documents or any contractual agreements with our existing owners or otherwise to declare or pay any dividends or other distributions (other than the obligations of PBF LLC to make tax distributions to its members). 56 Stock Performance Graph In accordance with SEC rules, the information contained in the Stock Performance Graph below shall not be deemed to be “soliciting material,” or to be “filed” with the SEC, or subject to the SEC’s Regulation 14A or 14C, other than as provided under Item 201(e) of Regulation S-K, or to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that we specifically request that the information be treated as soliciting material or specifically incorporate it by reference into a document filed under the Securities Act of 1933, as amended.
The declaration, amount and payment of any future dividends on shares of PBF Energy Class A common stock will be at the sole discretion of PBF Energy’s Board of Directors, and we are not obligated under any applicable laws, our governing documents or any contractual agreements with our existing owners or otherwise to declare or pay any dividends or other distributions (other than the obligations of PBF LLC to make tax distributions to its members). 59 Stock Performance Graph In accordance with SEC rules, the information contained in the Stock Performance Graph below shall not be deemed to be “soliciting material,” or to be “filed” with the SEC, or subject to the SEC’s Regulation 14A or 14C, other than as provided under Item 201(e) of Regulation S-K, or to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that we specifically request that the information be treated as soliciting material or specifically incorporate it by reference into a document filed under the Securities Act of 1933, as amended.
Dividend and Distribution Policy Subject to the following paragraphs, PBF Energy currently intends to continue to pay quarterly cash dividends of approximately $0.20 per share on its Class A common stock. PBF Energy is a holding company and has no material assets other than its ownership interests of PBF LLC.
Dividend and Distribution Policy Subject to the following paragraphs, PBF Energy currently intends to continue to pay quarterly cash dividends of approximately $0.25 per share on its Class A common stock. PBF Energy is a holding company and has no material assets other than its ownership interests of PBF LLC.
The ability of PBF Holding to make distributions to PBF LLC is, and in the future may be, limited by covenants in its Revolving Credit Facility, the 2028 Senior Notes, the 2025 Senior Notes and other debt instruments.
The ability of PBF Holding to make distributions to PBF LLC is, and in the future may be, limited by covenants in its Revolving Credit Facility, the 2030 Senior Notes, the 2028 Senior Notes and other debt instruments.
We were not obligated to purchase any shares under the Repurchase Program, and repurchases could be suspended or discontinued at any time without prior notice. ITEM 6. [RESERVED] 58
We were not obligated to purchase any shares under the Repurchase Program, and repurchases could be suspended or discontinued at any time without prior notice. ITEM 6. [RESERVED] 61
(2) Average price per share excludes transaction commissions. (3) On December 12, 2022, our Board of Directors authorized the repurchase of up to $500.0 million of PBF Energy’s Class A common stock (as amended from time to time, the "Repurchase Program"). The Repurchase Program will expire in December 2024.
(2) Average price per share excludes transaction commissions. (3) On December 12, 2022, our Board of Directors authorized the repurchase of up to $500.0 million of PBF Energy’s Class A common stock (as amended from time to time, the "Repurchase Program").
As of February 9, 2023 there were 253 holders of record of PBF Energy Class A common stock and 13 holders of record of PBF Energy Class B common stock.
As of February 9, 2024 there were 283 holders of record of PBF Energy Class A common stock and 12 holders of record of PBF Energy Class B common stock.
In addition, during the year ended December 31, 2022 PBF LLC used $25.0 million to make non-tax distributions of $0.20 per unit to its members, of which $24.8 million was distributed to PBF Energy and the balance was distributed to PBF LLC’s other members.
PBF Holding made $1,582.8 million in distributions to PBF LLC during the year ended December 31, 2023. In addition, during the year ended December 31, 2023 PBF LLC used $106.6 million to make non-tax distributions to its members, of which $105.8 million was distributed to PBF Energy and the balance was distributed to PBF LLC’s other members.
The graph assumes that the value of the investment in our common stock, in each index, and in the peer group (including reinvestment of dividends), was $100 on 12/31/2017 and tracks it through 12/31/2022. 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 PBF Energy Class A common stock $ 100.00 $ 95.06 $ 95.22 $ 21.81 $ 39.84 $ 125.81 S&P 500 100.00 95.62 125.72 148.85 191.58 156.89 Peer Group 100.00 89.00 107.83 71.05 95.61 164.63 57 Recent Sales of Unregistered Securities—Exchange of PBF LLC Series A Units for PBF Energy Class A Common Stock In the fourth quarter of 2022, there were no exchanges of PBF LLC Series A Units for shares of PBF Energy Class A common stock in transactions exempt from registration under Section 4(a)(2) of the Securities Act.
The graph assumes that the value of the investment in our common stock, in each index, and in the peer group (including reinvestment of dividends), was $100 on 12/31/2018 and tracks it through 12/31/2023. 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 PBF Energy Class A common stock $ 100.00 $ 100.17 $ 22.94 $ 41.91 $ 132.35 $ 145.54 S&P 500 100.00 131.49 155.68 200.37 164.08 207.21 Peer Group 100.00 121.13 79.53 106.66 183.36 224.04 60 Recent Sales of Unregistered Securities—Exchange of PBF LLC Series A Units for PBF Energy Class A Common Stock In the fourth quarter of 2023, 53,009 PBF LLC Series A Units were exchanged for 53,009 shares of PBF Energy Class A common stock in transactions exempt from registration under Section 4(a)(2) of the Securities Act.
PBF Energy used this $24.8 million to pay cash dividends of $0.20 per share of its Class A common stock on November 29, 2022. PBF LLC also made aggregate tax distributions to its members of $1,130.1 million, of which $1,121.8 million was made to PBF Energy.
PBF Energy used this $105.8 million to pay cash dividends of $0.20 per share of its Class A common stock on March 16, 2023, May 31, 2023 and August 31, 2023, and cash dividends of $0.25 per share on November 30, 2023.
Removed
PBFX made aggregate quarterly distributions of $75.3 million ($1.20 per unit) during the year ended December 31, 2022 to holders of its common units, of which $35.9 million was paid to PBF LLC.
Added
We received no other consideration in connection with any exchanges. No exchanges were made by any of our directors or current executive officers.
Removed
After the Merger Transaction PBF Energy and PBF LLC acquired all of the publicly held common units in PBFX representing limited partner interests in the partnership not already owned by certain wholly-owned subsidiaries of PBF Energy and its affiliate. Therefore, PBFX became an indirect wholly-owned subsidiary of PBF Energy and PBF LLC that may no longer pay dividends.
Added
On May 3, 2023, our Board of Directors approved an increase in the repurchase authorization amount under the Repurchase Program from $500.0 million to $1.0 billion and extended the program expiration date to December 2025.
Removed
PBF Holding made $571.4 million in distributions to PBF LLC during the year ended December 31, 2022.
Added
On February 13, 2024, our Board of Directors approved an increase in the repurchase authorization amount under the Repurchase Program from $1.0 billion to $1.75 billion.
Removed
PBF LLC expects to continue to make tax distributions to its members in accordance with its amended and restated limited liability company agreement.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

189 edited+41 added−108 removed108 unchanged
Biggest changeWe do not separately discuss our results by individual segments as, apart from PBFX’s third-party acquisitions, our Logistics segment did not have any significant third-party revenues and a significant portion of its operating results are eliminated in consolidation. 71 PBF Energy Year Ended December 31, 2022 2021 2020 Revenues $ 46,830.3 $ 27,253.4 $ 15,115.9 Cost and expenses: Cost of products and other 39,049.1 23,826.8 14,275.6 Operating expenses (excluding depreciation and amortization expense as reflected below) 2,599.0 2,085.9 1,918.3 Depreciation and amortization expense 503.6 453.5 551.7 Cost of sales 42,151.7 26,366.2 16,745.6 General and administrative expenses (excluding depreciation and amortization expense as reflected below) 468.7 247.3 248.5 Depreciation and amortization expense 7.5 13.3 11.3 Change in fair value of contingent consideration, net 48.3 32.4 (93.7) Impairment expense — — 98.8 Loss (gain) on sale of assets 0.9 (3.0) (477.8) Total cost and expenses 42,677.1 26,656.2 16,532.7 Income (loss) from operations 4,153.2 597.2 (1,416.8) Other income (expense): Interest expense, net (246.0) (317.5) (258.2) Change in Tax Receivable Agreement liability (290.3) (48.3) 373.5 Change in fair value of catalyst obligations (2.0) 8.5 (11.8) (Loss) gain on extinguishment of debt (66.1) 79.9 (22.2) Other non-service components of net periodic benefit cost 8.8 7.8 4.3 Income (loss) before income taxes 3,557.6 327.6 (1,331.2) Income tax expense 584.8 12.1 2.1 Net income (loss) 2,972.8 315.5 (1,333.3) Less: net income attributable to noncontrolling interests 96.0 84.5 59.1 Net income (loss) attributable to PBF Energy Inc. stockholders $ 2,876.8 $ 231.0 $ (1,392.4) Consolidated gross margin $ 4,678.6 $ 887.2 $ (1,629.7) Gross refining margin (1) $ 7,429.9 $ 3,087.7 $ 496.8 Net income available to Class A common stock per share: Basic $ 23.47 $ 1.92 $ (11.64) Diluted $ 22.84 $ 1.90 $ (11.64) —————————— (1) See Non-GAAP Financial Measures. 72 PBF LLC Year Ended December 31, 2022 2021 2020 Revenues $ 46,830.3 $ 27,253.4 $ 15,115.9 Cost and expenses: Cost of products and other 39,049.1 23,826.8 14,275.6 Operating expenses (excluding depreciation and amortization expense as reflected below) 2,599.0 2,085.9 1,918.3 Depreciation and amortization expense 503.6 453.5 551.7 Cost of sales 42,151.7 26,366.2 16,745.6 General and administrative expenses (excluding depreciation and amortization expense as reflected below) 466.6 245.2 247.7 Depreciation and amortization expense 7.5 13.3 11.3 Change in fair value of contingent consideration, net 48.3 32.4 (93.7) Impairment expense — — 98.8 Loss (gain) on sale of assets 0.9 (3.0) (477.8) Total cost and expenses 42,675.0 26,654.1 16,531.9 Income (loss) from operations 4,155.3 599.3 (1,416.0) Other income (expense): Interest expense, net (257.2) (327.8) (268.5) Change in fair value of catalyst obligations (2.0) 8.5 (11.8) (Loss) gain on extinguishment of debt (66.1) 79.9 (22.2) Other non-service components of net periodic benefit cost 8.8 7.8 4.3 Income (loss) before income taxes 3,838.8 367.7 (1,714.2) Income tax expense (benefit) 4.6 (14.0) 6.1 Net income (loss) 3,834.2 381.7 (1,720.3) Less: net income attributable to noncontrolling interests 68.1 82.1 76.2 Net income (loss) attributable to PBF Energy Company LLC $ 3,766.1 $ 299.6 $ (1,796.5) 73 Operating Highlights Year Ended December 31, 2022 2021 2020 Key Operating Information Production (bpd in thousands) 937.1 852.2 737.1 Crude oil and feedstocks throughput (bpd in thousands) 925.1 834.5 727.7 Total crude oil and feedstocks throughput (millions of barrels) 337.7 304.6 266.3 Consolidated gross margin per barrel of throughput $ 13.85 $ 2.91 $ (6.12) Gross refining margin, excluding special items, per barrel of throughput (1) $ 22.00 $ 7.94 $ 3.23 Refinery operating expense, per barrel of throughput $ 7.39 $ 6.56 $ 6.89 Crude and feedstocks (% of total throughput) (2) Heavy 32 % 34 % 42 % Medium 36 % 31 % 26 % Light 18 % 18 % 17 % Other feedstocks and blends 14 % 17 % 15 % Total throughput 100 % 100 % 100 % Yield (% of total throughput) Gasoline and gasoline blendstocks 47 % 53 % 51 % Distillates and distillate blendstocks 35 % 30 % 30 % Lubes 1 % 1 % 1 % Chemicals 1 % 2 % 1 % Other 17 % 16 % 18 % Total yield 101 % 102 % 101 % —————————— (1) See Non-GAAP Financial Measures.
Biggest changePBF Energy Year Ended December 31, 2023 2022 2021 Revenues $ 38,324.8 $ 46,830.3 $ 27,253.4 Cost and expenses: Cost of products and other 32,671.3 39,049.1 23,826.8 Operating expenses (excluding depreciation and amortization expense as reflected below) 2,694.9 2,599.0 2,085.9 Depreciation and amortization expense 560.0 503.6 453.5 Cost of sales 35,926.2 42,151.7 26,366.2 General and administrative expenses (excluding depreciation and amortization expense as reflected below) 362.5 468.7 247.3 Depreciation and amortization expense 11.5 7.5 13.3 Change in fair value of contingent consideration, net (45.8) 48.3 32.4 Equity loss in investee 45.3 — — Gain on formation of SBR equity method investment (925.1) — — (Gain) loss on sale of assets (1.3) 0.9 (3.0) Total cost and expenses 35,373.3 42,677.1 26,656.2 Income from operations 2,951.5 4,153.2 597.2 Other income (expense): Interest expense, net (63.8) (246.0) (317.5) Change in Tax Receivable Agreement liability 2.0 (290.3) (48.3) Change in fair value of catalyst obligations 1.1 (2.0) 8.5 (Loss) gain on extinguishment of debt (5.7) (66.1) 79.9 Other non-service components of net periodic benefit cost 0.7 8.8 7.8 Income before income taxes 2,885.8 3,557.6 327.6 Income tax expense 723.8 584.8 12.1 Net income 2,162.0 2,972.8 315.5 Less: net income attributable to noncontrolling interests 21.5 96.0 84.5 Net income attributable to PBF Energy Inc. stockholders $ 2,140.5 $ 2,876.8 $ 231.0 Consolidated gross margin $ 2,398.6 $ 4,678.6 $ 887.2 Gross refining margin (1) $ 5,287.7 $ 7,429.9 $ 3,087.7 Net income available to Class A common stock per share: Basic $ 17.13 $ 23.47 $ 1.92 Diluted $ 16.52 $ 22.84 $ 1.90 —————————— (1) See Non-GAAP Financial Measures. 73 Operating Highlights Year Ended December 31, 2023 2022 2021 Key Operating Information Production (bpd in thousands) 918.3 937.1 852.2 Crude oil and feedstocks throughput (bpd in thousands) 909.4 925.1 834.5 Total crude oil and feedstocks throughput (millions of barrels) 329.0 337.7 304.6 Consolidated gross margin per barrel of throughput $ 7.29 $ 13.85 $ 2.91 Gross refining margin, excluding special items, per barrel of throughput (1) $ 16.07 $ 22.00 $ 7.94 Refinery operating expense, per barrel of throughput $ 7.85 $ 7.39 $ 6.56 Crude and feedstocks (% of total throughput) (2) Heavy 27 % 32 % 34 % Medium 35 % 36 % 31 % Light 20 % 18 % 18 % Other feedstocks and blends 18 % 14 % 17 % Total throughput 100 % 100 % 100 % Yield (% of total throughput) Gasoline and gasoline blendstocks 47 % 47 % 53 % Distillates and distillate blendstocks 34 % 35 % 30 % Lubes 1 % 1 % 1 % Chemicals 1 % 1 % 2 % Other 18 % 17 % 16 % Total yield 101 % 101 % 102 % —————————— (1) See Non-GAAP Financial Measures.
With respect to the consolidation of PBF LLC, we record a noncontrolling interest for the economic interest in PBF LLC held by members other than PBF Energy, with respect to the consolidation of PBFX, we recorded a noncontrolling interest for the economic interests in PBFX held by the public unitholders of PBFX prior to the close of the PBFX Merger Transaction, and with respect to the consolidation of PBF Holding, we record a 20% noncontrolling interest for the ownership interests in two subsidiaries of Chalmette Refining held by a third-party.
With respect to the consolidation of PBF LLC, we record a noncontrolling interest for the economic interest in PBF LLC held by members other than PBF Energy, with respect to the consolidation of PBFX, we recorded a noncontrolling interest for the economic interests in PBFX held by the public unitholders of PBFX prior to the close of the Merger Transaction, and with respect to the consolidation of PBF Holding, we record a 20% noncontrolling interest for the ownership interests in two subsidiaries of Chalmette Refining held by a third-party.
The total noncontrolling interest on the Consolidated Statements of Operations represents the portion of the Company’s earnings or loss attributable to the economic interests held by members of PBF LLC other than PBF Energy, by the public common unitholders of PBFX prior to the close of the PBFX Merger Transaction and by the third-party stockholders of certain of Chalmette Refining’s subsidiaries.
The total noncontrolling interest on the Consolidated Statements of Operations represents the portion of the Company’s earnings or loss attributable to the economic interests held by members of PBF LLC other than PBF Energy, by the public common unitholders of PBFX prior to the close of the Merger Transaction and by the third-party stockholders of certain of Chalmette Refining’s subsidiaries.
We believe both gross refining margin and gross refining margin excluding special items are important measures of operating performance and provide useful information to investors because they are helpful metric comparisons to the industry refining margin benchmarks, as the refining margin benchmarks do not include a charge for operating expenses and refinery depreciation.
We believe both gross refining margin and gross refining margin excluding special items are important measures of operating performance and provide useful information to investors because they are helpful metric comparisons to the industry refining margin benchmarks, as the refining margin benchmarks do not include a charge for refinery operating expenses and depreciation.
Change in Tax Receivable Agreement liability - During the year ended December 31, 2022, we recorded a change in the Tax Receivable Agreement liability that decreased income before income taxes and net income by $290.3 million and $215.1 million, respectively.
During the year ended December 31, 2022, we recorded a change in the Tax Receivable Agreement liability that decreased income before income taxes and net income by $290.3 million and $215.1 million, respectively.
During the year ended December 31, 2021, PBF Energy recorded a change in the Tax Receivable Agreement liability that decreased income before income taxes and net income by $48.3 million and $35.8 million, respectively.
During the year ended December 31, 2021, PBF Energy recorded a change in the Tax Receivable Agreement liability that decreased income before taxes and net income by $48.3 million and $35.8 million, respectively.
For the year ended December 31, 2021, net cash used in financing activities consisted of $146.8 million related to the repurchase of the principal amount outstanding of the 2028 Senior Notes and the 2025 Senior Notes, excluding accrued interest, net repayments on the PBFX Revolving Credit Facility of $100.0 million, distributions and dividends of $39.7 million, net settlements of precious metal catalyst obligations of $31.7 million, payments on finance leases of $17.8 million, PBFX Contingent Consideration payments of $12.2 million, principal amortization payments on the PBF Rail Term Loan of $7.4 million, and deferred financing costs and other of $1.2 million.
For the year ended December 31, 2021, net cash used in financing activities consisted of $146.8 million related to the repurchase of the principal amount outstanding of the 2028 Senior Notes and the 2025 Senior Notes, excluding accrued interest, net repayments on the PBFX Revolving Credit Facility of $100.0 million, distributions and dividends of $39.7 million, net settlements of precious metal catalyst obligations of $31.7 million, payments on finance leases of $17.8 million, PBFX Contingent Consideration payments of $12.2 million, principal amortization payments of the PBF Rail Term Loan of $7.4 million, and deferred financing costs and other of $1.2 million.
As discussed in more detail below, each of our refineries, depending on market conditions, has certain feedstock-cost and product-value advantages and disadvantages as compared to the refinery’s relevant benchmark. 67 Credit Risk Management Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to us.
As discussed in more detail below, each of our refineries, depending on market conditions, has certain feedstock-cost and product-value advantages and disadvantages as compared to the refinery’s relevant benchmark. Credit Risk Management Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to us.
Our RINs purchase obligation is dependent on our actual shipment of on-road transportation fuels domestically and the amount of blending achieved. 66 Factors Affecting Operating Results Overview Our earnings and cash flows from operations are primarily affected by the relationship between refined product prices and the prices for crude oil and other feedstocks.
Our RINs purchase obligation is dependent on our actual shipment of on-road transportation fuels domestically and the amount of blending achieved. Factors Affecting Operating Results Overview Our earnings and cash flows from operations are primarily affected by the relationship between refined product prices and the prices for crude oil and other feedstocks.
We believe that our cash flows from operations and available capital resources will be sufficient to meet our and our subsidiaries’ capital expenditures, working capital needs, dividend payments, debt service and share repurchase program requirements, as well as PBF Energy’s obligations under the Tax Receivable Agreement, for the next twelve months.
We believe that our cash flows from operations and available capital resources will be sufficient to meet our and our subsidiaries’ capital expenditures, working capital needs, dividend payments, debt service requirements, share repurchases under our share repurchase program, as well as PBF Energy’s obligations under the Tax Receivable Agreement, for the next twelve months.
These periodic adjustments to the Tax Receivable Agreement liability, if any, are recorded in general and administrative expense and may result in adjustments to our income tax expense and deferred tax assets and liabilities. Recent Accounting Pronouncements Refer to “Note 2 - Summary of Significant Accounting Policies” of our Notes to Consolidated Financial Statements, for Recently Issued Accounting Pronouncements.
These periodic adjustments to the Tax Receivable Agreement liability, if any, are recorded in general and administrative expense and may result in adjustments to our income tax expense and deferred tax assets and liabilities. 100 Recent Accounting Pronouncements Refer to “Note 2 - Summary of Significant Accounting Policies” of our Notes to Consolidated Financial Statements, for Recently Issued Accounting Pronouncements.
Historically, Toledo’s blended average crude costs have differed from the market value of WTI crude oil; • the Toledo refinery configuration enables it to produce more barrels of product than throughput which generates a pricing benefit; and • the Toledo refinery generates a pricing benefit on some of its refined products, primarily its petrochemicals. 69 Chalmette Refinery.
Historically, Toledo’s blended average crude costs have differed from the market value of WTI crude oil; • the Toledo refinery configuration enables it to produce more barrels of product than throughput which generates a pricing benefit; and • the Toledo refinery generates a pricing benefit on some of its refined products, primarily its petrochemicals. Chalmette Refinery.
Such Merger Agreement consideration totaled $303.7 million in cash and resulted in the issuance of 8,864,684 shares of PBF Energy Class A common stock. The PBFX Common Units owned by PBF LLC and PBFX Holdings and the non-economic general partner interest remain outstanding and were unaffected by the Merger.
Such Merger Agreement consideration totaled $303.7 million in cash and resulted in the issuance of 8,864,684 shares of PBF Energy Class A common stock. The PBFX Common Units owned by PBF LLC and PBFX Holdings and the non-economic general partner interest remain outstanding and were unaffected by the Merger Transaction.
During the year ended December 31, 2021, we recorded a pre-tax gain on extinguishment of debt related to the repurchase of a portion of the 2028 Senior Notes and the 2025 Senior Notes, which increased income before income taxes and net income by $79.9 million and $59.2 million, respectively.
During the year ended December 31, 2021, we recorded pre-tax gain on extinguishment of debt related to the repurchase of a portion of each of the 2028 Senior Notes and the 2025 Senior Notes, which increased income before income taxes and net income by $79.9 million and $59.2 million, respectively.
Failure to meet the incurrence covenants could impose certain incremental restrictions on, among other matters, our ability to incur new debt (including secured debt) and also may limit the extent to which we may pay future dividends, make new investments, repurchase our outstanding debt or stock or incur new liens.
Failure to meet the incurrence covenants could impose certain incremental restrictions on, among other matters, our ability to incur new debt (including secured debt) and also may limit the extent to which we may pay future dividends, make acquisitions or investments, repurchase our outstanding debt or stock or incur new liens.
Our total throughput costs have historically priced at a discount to Dated Brent; and • as a result of the heavy, sour crude slate processed at our East Coast Refining System, we produce lower value products including sulfur, carbon dioxide and petroleum coke.
Our total throughput costs have historically priced at a discount to Dated Brent; and 70 • as a result of the heavy, sour crude slate processed at our East Coast Refining System, we produce lower value products including sulfur, carbon dioxide and petroleum coke.
These products are priced at a significant discount to gasoline and diesel. 70 Martinez Refinery . The benchmark refining margin for the Martinez refinery is calculated by assuming that three barrels of ANS crude oil are converted into two barrels of gasoline, one-quarter barrel of diesel and three-quarter barrel of jet fuel.
These products are priced at a significant discount to gasoline and diesel. Martinez Refinery . The benchmark refining margin for the Martinez refinery is calculated by assuming that three barrels of ANS crude oil are converted into two barrels of gasoline, one-quarter barrel of diesel and three-quarter barrel of jet fuel.
Net cash used in investing activities for the year ended December 31, 2021 was comprised of cash outflows of capital expenditures totaling $249.1 million, expenditures for refinery turnarounds of $117.7 million, and expenditures for other assets of $28.9 million, partially offset by proceeds from the sale of assets of $7.2 million.
Net cash used in investing activities for the year ended December 31, 2021 was comprised of capital expenditures totaling $249.1 million, expenditures for refinery turnarounds of $117.7 million and expenditures for other assets of $28.9 million, partially offset by proceeds from sale of assets of $7.2 million.
Although we believe that Non-GAAP financial measures, excluding the impact of special items, provide useful supplemental information to investors regarding the results and performance of our business and allow for helpful period-over-period comparisons, such Non-GAAP measures should only be considered as a supplement to, and not as a substitute for, or superior to, the financial measures prepared in accordance with GAAP. 80 Adjusted Fully-Converted Net Income (Loss) and Adjusted Fully-Converted Net Income (Loss) Excluding Special Items PBF Energy utilizes results presented on an Adjusted Fully-Converted basis that reflects an assumed exchange of all PBF LLC Series A Units for shares of PBF Energy Class A common stock.
Although we believe that Non-GAAP financial measures, excluding the impact of special items, provide useful supplemental information to investors regarding the results and performance of our business and allow for helpful period-over-period comparisons, such Non-GAAP measures should only be considered as a supplement to, and not as a substitute for, or superior to, the financial measures prepared in accordance with GAAP. 80 Adjusted Fully-Converted Net Income and Adjusted Fully-Converted Net Income (Loss) Excluding Special Items PBF Energy utilizes results presented on an Adjusted Fully-Converted basis that reflect an assumed exchange of all PBF LLC Series A Units for shares of PBF Energy Class A common stock.
In addition, the effect of changes in crude oil prices on our operating results is influenced by how the prices of refined products adjust to reflect such changes. Crude oil and other feedstock costs and the prices of refined products have historically been subject to wide fluctuation.
In addition, the effect of changes in crude oil prices on our operating results is influenced by how the prices of refined products adjust to reflect such changes. 68 Crude oil and other feedstock costs and the prices of refined products have historically been subject to wide fluctuation.
The net impact of these LCM inventory adjustments are included in the Refining segment’s income from operations, but are excluded from the operating results presented, as applicable, in order to make such information comparable between periods.
The net impact of these LCM inventory adjustments is included in the Refining segment’s income from operations, but are excluded from the operating results presented, as applicable, in order to make such information comparable between periods.
(5) Represents weighted-average diluted shares outstanding assuming the conversion of all common stock equivalents, including options and warrants for PBF LLC Series A Units and performance share units and options for shares of PBF Energy Class A common stock as calculated under the treasury stock method (to the extent the impact of such exchange would not be anti-dilutive) for the years ended December 31, 2022, 2021 and 2020, respectively.
(5) Represents weighted-average diluted shares outstanding assuming the conversion of all common stock equivalents, including options and warrants for PBF LLC Series A Units and performance share units and options for shares of PBF Energy Class A common stock as calculated under the treasury stock method (to the extent the impact of such exchange would not be anti-dilutive) for the years ended December 31, 2023, 2022 and 2021, respectively.
During the year ended December 31, 2021, we recorded a deferred tax valuation allowance of $308.5 million in accordance with ASC 740 (a decrease of $49.9 million when compared to December 31, 2020, which includes a tax benefit of approximately $12.5 million related to our net change in the Tax Receivable Agreement liability and a net tax benefit of $37.4 million related primarily to the remeasurement of deferred tax assets).
During the year ended December 31, 2021, we recorded a deferred tax valuation allowance of $308.5 million in accordance with ASC 740 (a decrease of $49.9 million when compared to December 31, 2020, which included a tax benefit of approximately $12.5 million related to our net change in the Tax Receivable Agreement liability and a net tax benefit of $37.4 million related primarily to the remeasurement of deferred tax assets).
The East Coast Refining System’s realized gross margin on a per barrel basis is projected to differ from the Dated Brent (NYH) 2-1-1 benchmark refining margin due to the following factors: • the system processes a slate of primarily medium and heavy sour crude oils, which has constituted approximately 60% to 75% of total throughput.
The East Coast Refining System’s realized gross margin on a per barrel basis is projected to differ from the Dated Brent (NYH) 2-1-1 benchmark refining margin due to the following factors: • the system processes a slate of primarily medium and heavy sour crude oils, which has constituted approximately 50% to 75% of total throughput.
Material Cash Requirements Our material cash requirements include the following known contractual and other obligations as of December 31, 2022 that are expected to be paid within the next year and thereafter (in millions). The table below does not include any intercompany contractual obligations with PBFX as our related party transactions are eliminated upon consolidation of our financial statements.
Material Cash Requirements Our material cash requirements include the following known contractual and other obligations as of December 31, 2023 that are expected to be paid within the next year and thereafter (in millions). The table below does not include any intercompany contractual obligations with PBFX as our related party transactions are eliminated upon consolidation of our financial statements.
The Martinez refinery’s realized gross margin on a per barrel basis has historically differed from the ANS (West Coast) 4-3-1 benchmark refining margin due to the following factors: • the Martinez refinery has generally processed a slate of primarily heavy sour crude oils, which has historically constituted approximately 70% to 90% of total throughput.
The Martinez refinery’s realized gross margin on a per barrel basis has historically differed from the ANS (West Coast) 4-3-1 benchmark refining margin due to the following factors: • the Martinez refinery has generally processed a slate of primarily heavy sour crude oils, which has historically constituted approximately 45% to 70% of total throughput.
Net Tax (Benefit) Expense on Remeasurement of Deferred Tax Assets - During the year ended December 31, 2022, we recorded a decrease to our deferred tax valuation allowance of $308.5 million (reducing our deferred tax valuation allowance to zero), in accordance with ASC 740, of which $233.8 million related to a tax benefit with respect to the remeasurement of deferred tax assets and the balance related to our net changes in the Tax Receivable Agreement liability.
During the year ended December 31, 2022, we recorded a decrease to our deferred tax valuation allowance of $308.5 million (reducing our deferred tax valuation allowance to zero), in accordance with ASC 740, of which $233.8 million related to a tax benefit with respect to the remeasurement of deferred tax assets and the balance related to our net changes in the Tax Receivable Agreement liability.
As these distributions are conditional they have been excluded from the table above. 100 Critical Accounting Policies The following summary provides further information about our critical accounting policies that involve critical accounting estimates and should be read in conjunction with “Note 2 - Summary of Significant Accounting Policies” of our Notes to Consolidated Financial Statements.
As these distributions are conditional, they have been excluded from the table above. 97 Critical Accounting Policies The following summary provides further information about our critical accounting policies that involve critical accounting estimates and should be read in conjunction with “Note 2 - Summary of Significant Accounting Policies” of our Notes to Consolidated Financial Statements.
However, our ability to generate sufficient cash flow from operations depends, in part, on petroleum oil market pricing and general economic, political and other factors beyond our control. As of December 31, 2022, we are in compliance with all covenants, including financial covenants, in all our debt agreements.
However, our ability to generate sufficient cash flow from operations depends, in part, on petroleum oil market pricing and general economic, political and other factors beyond our control. As of December 31, 2023, we are in compliance with all covenants, including financial covenants, in all our debt agreements.
Land Sales On December 20, 2021, PBFX closed on a third-party sale of real property at the refined products terminals in the greater Philadelphia area (“East Coast Terminals”). The sale resulted in a gain of approximately $2.8 million in the fourth quarter of 2021, included within Gain on sale of assets in the Consolidated Statements of Operations.
On December 20, 2021, PBFX closed on a third-party sale of real property at the refined products terminals in the greater Philadelphia area (“East Coast Terminals”). The sale resulted in a gain of approximately $2.8 million in the fourth quarter of 2021, included within Gain on sale of assets in the Consolidated Statements of Operations.
Our general and administrative expenses are comprised of personnel, facilities and other infrastructure costs necessary to support our refineries and related logistics assets.
General and administrative costs are comprised of personnel, facilities and other infrastructure costs necessary to support our refineries and related logistics assets.
In addition, the use of the LIFO inventory method may result in increases or decreases to cost of sales in years that inventory volumes decline as the result of charging cost of sales with LIFO inventory costs generated in prior periods. At December 31, 2022 and December 31, 2021 the replacement value of inventories exceeded the LIFO carrying value.
In addition, the use of the LIFO inventory method may result in increases or decreases to cost of sales in years that inventory volumes decline as the result of charging cost of sales with LIFO inventory costs generated in prior periods. At December 31, 2023 and December 31, 2022 the replacement value of inventories exceeded the LIFO carrying value.
Discussions of results for the year ended December 31, 2020 and comparisons of the results for the years ended December 31, 2021 and 2020 can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's annual report on Form 10-K for the year ended December 31, 2021.
Discussions of results for the year ended December 31, 2021 and comparisons of the results for the years ended December 31, 2022 and 2021 can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's annual report on Form 10-K for the year ended December 31, 2022.
Our operating cash flows for the year ended December 31, 2022 included our net income of $2,972.8 million, and net changes in operating assets and liabilities reflecting cash proceeds of $341.0 million, primarily driven by timing of payments for accrued expense.
Our operating cash flows for the year ended December 31, 2022 included our net income of $2,972.8 million, and net changes in operating assets and liabilities reflecting cash proceeds of $341.0 million, primarily driven by timing of payments for accrued expenses.
Our railcar fleet, at times, provides transportation flexibility within our crude oil sourcing strategy that allows our East Coast refineries to process cost advantaged crude from Canada and the Mid-Continent. Our operating cost structure is also important to our profitability.
Our railcar fleet provides transportation flexibility within our crude oil sourcing strategy that allows our East Coast refineries to process cost advantaged crude from Canada and the Mid-Continent. Our operating cost structure is also important to our profitability.
This ratio is a measurement that management believes is useful to investors in analyzing our leverage. Net debt and the net debt to capitalization ratio are Non-GAAP measures. Net debt is calculated by subtracting cash and cash equivalents from total debt.
This ratio is a measurement that management believes is useful to investors in analyzing our leverage. Net debt and the net debt to capitalization ratio are Non-GAAP measures. Net debt is calculated by subtracting cash and cash equivalents from total debt. Total capitalization is calculated by adding total debt and total equity.
The net cash flows used in investing activities for the year ended December 31, 2022 was comprised of cash outflows of capital expenditures totaling $633.3 million, expenditures for refinery turnarounds of $311.6 million, and expenditures for other assets of $66.0 million.
Net cash used in investing activities for the year ended December 31, 2022 was comprised of capital expenditures totaling $633.3 million, expenditures for refinery turnarounds of $311.6 million and expenditures for other assets of $66.0 million.
The obligations in the table above reflect our undiscounted best estimate in cost and tenure to remediate our outstanding obligations and are further discussed in “Note 12 - Commitments and Contingencies” of our Notes to Consolidated Financial Statements.
The obligations in the table above reflect our undiscounted best estimate in cost and tenure to remediate our outstanding obligations and are further discussed in “Note 11 - Commitments and Contingencies” of our Notes to Consolidated Financial Statements.
For the year ended December 31, 2022, net cash used in financing activities consisted of the redemption of our 2025 Senior Secured Notes of $1,307.4 million, net repayments on the Revolving Credit Facility of $900.0 million, the purchase of PBFX publicly held shares in connection with the Merger Transaction of $303.7 million, the share repurchase of PBF Energy’s Class A common stock of $156.4 million, net repayments on the PBFX Revolving Credit Facility of $100.0 million, dividends and distributions of $73.6 million, settlements of precious metal catalyst obligations of $56.2 million, deferred financing costs and other costs of $31.3 million, $25.9 million related to the repurchase of the principal amount outstanding of the 2028 Senior Notes and the 2025 Senior Notes, excluding accrued interest, payments on finance leases of $11.3 million, and PBFX Contingent Consideration payments of $3.1 million, partially offset by transactions made in connection with stock-based compensation plans of $67.8 million, and proceeds from insurance premium financing of $2.1 million.
For the year ended December 31, 2022, net cash used in financing activities consisted of the redemption of the 2025 Senior Secured Notes of $1,307.4 million, net repayments on the Revolving Credit Facility of $900.0 million, the purchase of PBFX publicly held shares in connection with the Merger Transaction of $303.7 million, share repurchases of PBF Energy’s Class A common stock of $156.4 million, net repayments on the PBFX Revolving Credit Facility of $100.0 million, dividends and distributions of $73.6 million, settlements of precious metal catalyst obligations of $56.2 million, deferred financing costs and other costs of $31.3 million, $25.9 million related to the repurchase of the principal amount outstanding of the 2028 Senior Notes and the 2025 Senior Notes, excluding accrued interest, payments on finance leases of $11.3 million, and PBFX Contingent Consideration payments of $3.1 million, partially offset by transactions made in connection with stock-based compensation plans of $67.8 million, and proceeds from insurance premium financing of $2.1 million. 92 Net cash used in financing activities was $2,899.0 million for the year ended December 31, 2022 compared to net cash used in financing activities of $356.8 million for the year ended December 31, 2021.
Our Toledo refinery has a product slate of approximately 51% gasoline, 36% distillate, 5% high-value petrochemicals (including nonene, tetramer, benzene, xylene and toluene) with the remaining portion of the product slate comprised of lower-value products (5% LPGs and 3% black oil). For this reason, we believe the WTI (Chicago) 4-3-1 is an appropriate benchmark industry refining margin.
Our Toledo refinery has a product slate of approximately 50% gasoline, 37% distillate, 4% high-value petrochemicals (including nonene, tetramer, benzene, xylene and toluene) with the remaining portion of the product slate comprised of lower-value products (4% LPGs and 5% black oil). For this reason, we believe the WTI (Chicago) 4-3-1 is an appropriate benchmark industry refining margin.
Cash Flows from Investing Activities Net cash used in investing activities was $1,010.9 million for the year ended December 31, 2022 compared to $388.5 million for the year ended December 31, 2021.
Net cash used in investing activities was $1,010.9 million for the year ended December 31, 2022 compared to $388.5 million for the year ended December 31, 2021.
Loss (Gain) on Extinguishment of Debt - During the year ended December 31, 2022, we recorded a pre-tax net loss on extinguishment of debt which decreased income before income taxes and net income by $66.1 million and $49.0 million, respectively, primarily related to the redemption of our 2025 Senior Secured Notes, partially offset by the repurchase of a portion of the 2028 Senior Notes and the 2025 Senior Notes.
During the year ended December 31, 2022, we recorded a net pre-tax loss on extinguishment of debt related to the redemption of the 2025 Senior Secured Notes, partially offset by the gain recognized on the repurchase of a portion of each of the 2028 Senior Notes and the 2025 Senior Notes, which decreased income before income taxes and net income by $66.1 million and $49.0 million, respectively.
The Torrance refinery’s realized gross margin on a per barrel basis has historically differed from the ANS (West Coast) 4-3-1 benchmark refining margin due to the following factors: • the Torrance refinery has generally processed a slate of primarily heavy sour crude oils, which has historically constituted approximately 70% to 90% of total throughput.
The Torrance refinery’s realized gross margin on a per barrel basis has historically differed from the ANS (West Coast) 4-3-1 benchmark refining margin due to the following factors: • the Torrance refinery has generally processed a slate of primarily heavy sour crude oils, which has historically constituted approximately 65% to 80% of total throughput.
The remaining throughput consists of sweet crude oil and other feedstocks and blendstocks; and • as a result of the heavy, sour crude slate processed at Chalmette, we produce lower-value products including sulfur and petroleum coke. These products are priced at a significant discount to 87 conventional gasoline and ULSD. Torrance Refinery.
The remaining throughput consists of heavy crude oils and other feedstocks and blendstocks; and • as a result of the heavy, sour crude slate processed at Chalmette, we produce lower-value products including sulfur and petroleum coke. These products are priced at a significant discount to 87 conventional gasoline and ULSD. 71 Torrance Refinery.
Our Martinez refinery has a product slate of approximately 54% gasoline and 35% distillate with the remaining portion of the product slate comprised of lower-value products (2% black oil petroleum coke, 4% LPG and 5% other). For this reason, we believe the ANS (West Coast) 3-2-1 is an appropriate benchmark industry refining margin.
Our Martinez refinery has a product slate of approximately 57% gasoline and 31% distillate with the remaining portion of the product slate comprised of lower-value products (4% black oil petroleum coke, 4% LPG and 4% other). For this reason, we believe the ANS (West Coast) 3-2-1 is an appropriate benchmark industry refining margin.
(2) Represents an adjustment to reflect PBF Energy’s annualized statutory corporate tax rate of approximately 25.9% for 2022 and 2021, and 26.6% for 2020, applied to the net income (loss) attributable to noncontrolling interest for all periods presented. The adjustment assumes the full exchange of existing PBF LLC Series A Units as described in (1) above.
(2) Represents an adjustment to reflect PBF Energy’s annualized statutory corporate tax rate of approximately 26.0% for 2023 and 25.9% for 2022 and 2021, applied to net income attributable to noncontrolling interest for all periods presented. The adjustment assumes the full exchange of existing PBF LLC Series A Units as described in (1) above.
In this Item 7, we discuss results for the years ended December 31, 2022 and 2021 and comparisons of the results for the years ended December 31, 2022 and 2021.
In this Item 7, we discuss results for the years ended December 31, 2023 and 2022 and comparisons of the results for the years ended December 31, 2023 and 2022.
Change in accrued expenses is due primarily to an increase in renewable energy and emissions obligations, as a result of an increase in our unfunded RINs obligation as of December 31, 2022.
Change in accrued expenses was due primarily to an increase in renewable energy credit and emissions obligations, as a result of an increase in our unfunded RINs obligation as of December 31, 2022.
Margins on the Gulf Coast were negatively impacted from our refinery specific slate by a weakening WTI/LLS differential, which averaged a premium of $2.22 per barrel for the year ended December 31, 2022 as compared to a premium of $1.50 per barrel in the prior year.
Margins on the Gulf Coast were negatively impacted from our refinery specific slate by a weakening WTI/LLS differential, which averaged a premium of $2.48 per barrel for the year ended December 31, 2023 as compared to a premium of $2.22 per barrel in the prior year.
Recomputed Income Tax on Special Items - The income tax impact on these special items, other than the net tax expense special item discussed below, is calculated using the tax rates shown in (2) above.
Recomputed income tax on special items - The income tax impact on these special items, other than the net tax benefit special item discussed above, is calculated using the tax rates shown in (2) above.
East Coast Refining System (Delaware City and Paulsboro Refineries). The benchmark refining margin for the East Coast Refining System is calculated by assuming that two barrels of Dated Brent crude oil are converted into one barrel of gasoline and one barrel of diesel.
The benchmark refining margin for the East Coast Refining System is calculated by assuming that two barrels of Dated Brent crude oil are converted into one barrel of gasoline and one barrel of diesel.
(Loss) Gain on Extinguishment of Debt — We incurred a loss on extinguishment of debt of $66.1 million in the year ended December 31, 2022 related to the redemption of all of the outstanding 2025 Senior Secured Notes, slightly offset by a gain related to the repurchase of a portion of our 2028 Senior Notes and 2025 Senior Notes.
There was a loss on extinguishment of debt of $66.1 million incurred in the year ended December 31, 2022 related to the redemption of all of the outstanding 2025 Senior Secured Notes, slightly offset by a gain related to the repurchase of a portion of each of the 2028 Senior Notes and 2025 Senior Notes.
The East Coast Refining System has a product slate of approximately 39% gasoline, 37% distillate, 2% high-value Group I lubricants, 1% high-value petrochemicals, with the remaining portion of the product slate comprised of lower-value products (3% LPGs, 12% black oil and 6% other). For this reason, we believe the Dated Brent (NYH) 2-1-1 is an appropriate benchmark industry refining margin.
The East Coast Refining System has a product slate of approximately 39% gasoline, 35% distillate, 2% high-value Group I lubricants, 1% high-value petrochemicals, with the remaining portion of the product slate comprised of lower-value products (4% LPGs, 15% black oil and 4% other). For this reason, we believe the Dated Brent (NYH) 2-1-1 is an appropriate benchmark industry refining margin.
Our operating cash flows for the year ended December 31, 2021 included our net income of $315.5 million, depreciation and amortization of $483.8 million, net changes in operating assets and liabilities reflecting cash proceeds of $268.6 million primarily driven by accrued expenses due to an increase in renewable energy credit and emissions obligations, as a result of an increase in our unfunded RINs obligation as of December 31, 2021, pension and other post-retirement benefit costs of $50.8 million, change in the Tax Receivable Agreement liability of $48.3 million, stock-based compensation of $35.6 million, change in the fair value of contingent consideration of $32.4 million, and deferred income taxes of $11.7 million, partially offset by a net non-cash benefit of $669.6 million related to an LCM inventory adjustment, gain on extinguishment of debt related to the repurchase of a portion of our 2028 Senior Notes and 2025 Senior Notes of $79.9 million, changes in the fair value of our catalyst obligations of $8.5 million, net non-cash charges related to the change in the fair value of our inventory repurchase obligations of $8.4 million, and gain on sale of assets of $3.0 million. 91 Net cash provided by operating activities was $477.3 million for the year ended December 31, 2021 compared to net cash used in operating activities of $631.6 million for the year ended December 31, 2020.
Our operating cash flows for the year ended December 31, 2021 included our net income of $315.5 million, depreciation and amortization of $483.8 million, net changes in operating assets and liabilities reflected cash proceeds of $268.6 million primarily driven by accrued expenses due to an increase in renewable energy credit and emissions obligations, as a result of an increase in our unfunded RIN’s obligations as of December 31, 2021, pension and other post-retirement benefits costs of $50.8 million, change in the Tax Receivable Agreement liability of $48.3 million, stock-based compensation of $35.6 million, change in the fair value of contingent consideration of $32.4 million, and deferred income taxes of $11.7 million, partially offset by net benefit of $669.6 million related to an LCM inventory adjustment, gain on extinguishment of debt related to the repurchase of a portion of our 2028 Senior Notes and 2025 Senior Notes of $79.9 million, change in the fair value of our catalyst obligations of $8.5 million, net non-cash charges related to the change in the fair value of our inventory repurchase obligations of $8.4 million, and gain on sale of assets of $3.0 million.
The Delaware City rail unloading facilities, and the East Coast Storage Assets, allow our East Coast refineries to source WTI-based crude oils from Western Canada and the Mid-Continent, which we believe, at times, may provide cost advantages versus traditional Brent-based international crude oils.
Currently, crude oil delivered by rail is consumed at our East Coast refineries. The Delaware City rail unloading facilities, and the East Coast Storage Assets, allow our East Coast refineries to source WTI-based crude oils from Western Canada and the Mid-Continent, which we believe, at times, may provide cost advantages versus traditional Brent-based international crude oils.
Common stock equivalents exclude the effects of performance share units and options and warrants to purchase 3,877,035, 12,568,275 and 14,446,894 shares of PBF Energy Class A common stock and PBF LLC Series A Units because they are anti-dilutive for the years ended December 31, 2022, 2021 and 2020, respectively.
Common stock equivalents exclude the effects of performance share units and options and warrants to purchase 18,431, 3,877,035 and 12,568,275 shares of PBF Energy Class A common stock and PBF LLC Series A Units because they are anti-dilutive for the years ended December 31, 2023, 2022 and 2021, respectively.
Our Chalmette refinery has a product slate of approximately 44% gasoline and 36% distillate, 1% high-value petrochemicals with the remaining portion of the product slate comprised of lower-value products (7% black oil, 5% LPGs, 3% petroleum coke, and 4% other). For this reason, we believe the LLS (Gulf Coast) 2-1-1 is an appropriate benchmark industry refining margin.
Our Chalmette refinery has a product slate of approximately 47% gasoline and 34% distillate, 1% high-value petrochemicals with the remaining portion of the product slate comprised of lower-value products (6% black oil, 5% LPGs, 2% petroleum coke, and 5% other). For this reason, we believe the LLS (Gulf Coast) 2-1-1 is an appropriate benchmark industry refining margin.
PBF Energy recognizes an income tax expense or benefit in our consolidated financial statements based on PBF Energy’s allocable share of PBF LLC’s pre-tax income or loss, which was approximately 99.3% and 99.2%, on a weighted-average basis for the years ended December 31, 2022 and 2021, respectively.
PBF Energy recognizes an income tax expense or benefit in our consolidated financial statements based on PBF Energy’s allocable share of PBF LLC’s pre-tax income or loss, which was approximately 99.3% on a weighted-average basis for both the year ended December 31, 2023 and 2022.
Our overall increase in cash provided by operating activities also included depreciation and amortization of $533.9 million, deferred income taxes of $420.2 million, change in the Tax Receivable Agreement liability of $290.3 million, net loss on extinguishment of debt primarily related to the redemption of our 2025 Senior Secured Notes of $66.1 million, stock-based compensation of $54.3 million, net change in the fair value of contingent consideration of $48.3 million, pension and other post-retirement benefit costs of $47.6 million, change in the fair value of our catalyst obligations of $2.0 million, and loss on sale of assets of $0.9 million, partially offset by net non-cash charges related to the change in the fair value of our inventory repurchase obligations of $5.4 million.
Our overall increase in cash provided by operating activities also included depreciation and amortization of $533.9 million, deferred income taxes of $420.2 million, change in the Tax Receivable Agreement liability of $290.3 million, net loss on extinguishment of debt primarily related to the redemption of our 2025 Senior Secured Notes of $66.1 million, stock-based compensation of $54.3 million, net change in the fair value of contingent consideration of $48.3 million, pension and other post-retirement benefit costs of $47.6 million, changes in the fair value of our catalyst obligations of $2.0 million, and loss on sale of assets of $0.9 million, partially offset by a net non-cash charges related to the change in the fair value of our inventory repurchase obligations of $5.4 million. 91 Net cash provided by operating activities was $4,772.0 million for the year ended December 31, 2022 compared to net cash provided by operating activities of $477.3 million for the year ended December 31, 2021.
Our Torrance refinery has a product slate of approximately 56% gasoline and 27% distillate with the remaining portion of the product slate comprised of lower-value products (3% LPG, 3% black oil and 11% other). For this reason, we believe the ANS (West Coast) 4-3-1 is an appropriate benchmark industry refining margin.
Our Torrance refinery has a product slate of approximately 54% gasoline and 29% distillate with the remaining portion of the product slate comprised of lower-value products (5% black oil, 2% LPG and 10% other). For this reason, we believe the ANS (West Coast) 4-3-1 is an appropriate benchmark industry refining margin.
The difference between the carrying value of the 2025 Senior Secured Notes on the date they were redeemed and the amount for which they were redeemed was $69.9 million and was recorded as a loss on extinguishment of debt in the Consolidated Statements of Operations. 94 In addition, we made a number of open market repurchases of our 2028 Senior Notes and 2025 Senior Notes that resulted in the extinguishment of $24.9 million in principal of the 2028 Senior Notes and $5.0 million in principal of the 2025 Senior Notes.
The difference between the carrying value of the 2025 Senior Secured Notes on the date they were redeemed and the amount for which they were redeemed was $69.9 million and was recorded as a Loss on extinguishment of debt in the Consolidated Statements of Operations. 65 During the year ended December 31, 2022, we made a number of open market repurchases of our 2028 Senior Notes and our 2025 Senior Notes that resulted in the extinguishment of $24.9 million in principal of the 2028 Senior Notes and $5.0 million in principal of the 2025 Senior Notes.
As a result of these transactions, PBF Energy’s tax basis in its share of PBF LLC’s assets will be higher than the book basis of these same assets. This resulted in a deferred tax asset of $191.4 million as of December 31, 2022.
As a result of these transactions, PBF Energy’s tax basis in its share of PBF LLC’s assets will be higher than the book basis of these same assets. This resulted in a deferred tax asset of $171.6 million as of December 31, 2023.
PBF Energy’s weighted-average equity interest in PBF LLC was 99.3% and 99.2% for the years ended December 31, 2022 and 2021, respectively. 75 Our results for the year ended December 31, 2022 were negatively impacted by special items consisting of pre-tax charges associated with the change in the Tax Receivable Agreement liability of $290.3 million, or $215.1 million net of tax, a net loss on the extinguishment of debt mainly associated with the redemption of our 2025 Senior Secured Notes of $66.1 million, or $49.0 million net of tax, and net changes in fair value of contingent consideration of $48.3 million, or $35.8 million net of tax, partially offset by a $233.8 million tax benefit associated with the remeasurement of certain deferred tax assets.
Our results for the year ended December 31, 2022 were negatively impacted by special items consisting of pre-tax charges associated with the change in the Tax Receivable Agreement liability of $290.3 million, or $215.1 million net of tax, a net loss on the extinguishment of debt mainly associated with the redemption of our 2025 Senior Secured Notes of $66.1 million, or $49.0 million net of tax, and net changes in fair value of contingent consideration of $48.3 million, or $35.8 million net of tax, partially offset by a $233.8 million tax benefit associated with the remeasurement of certain deferred tax assets.
Change in Fair Value of Catalyst Obligations — Change in fair value of catalyst obligations represented a loss of $2.0 million for the year ended December 31, 2022, compared to a gain of $8.5 million for the year ended December 31, 2021.
Change in fair value of catalyst obligations — Change in fair value of catalyst obligations represented a gain of $1.1 million for the year ended December 31, 2023, compared to a loss of $2.0 million for the year ended December 31, 2022.
We incurred approximately $1,225.5 million in RINs costs during the year ended December 31, 2022 as compared to $726.0 million and $326.4 million during the years ended December 31, 2021 and 2020, respectively. The increases in RINs costs are due primarily to volatility in prices for ethanol-linked RINs and increases in our production of on-road transportation fuels.
We incurred approximately $762.3 million in RINs costs during the year ended December 31, 2023 as compared to $1,225.5 million and $726.0 million during the years ended December 31, 2022 and 2021, respectively. The fluctuations in RINs costs are due primarily to volatility in prices for ethanol-linked RINs and changes in our production of on-road transportation fuels.
The Chalmette refinery’s realized gross margin on a per barrel basis has historically differed from the LLS (Gulf Coast) 2-1-1 benchmark refining margin due to the following factors: • the Chalmette refinery has generally processed a slate of primarily medium and heavy sour crude oils, which has historically constituted approximately 50% to 75% of total throughput.
The Chalmette refinery’s realized gross margin on a per barrel basis has historically differed from the LLS (Gulf Coast) 2-1-1 benchmark refining margin due to the following factors: • the Chalmette refinery has recently processed a slate of primarily light and medium crude oils, which represents approximately 60% to 75% of total throughput.
Total cash consideration paid to repurchase the principal amount outstanding of the 2028 Senior Notes and the 2025 Senior Notes, excluding accrued interest, totaled $25.9 million and we recognized a $3.8 million gain on this extinguishment of debt during the year ended December 31, 2022. On May 25, 2022, we entered into an amendment of our Revolving Credit Agreement.
Total cash consideration paid to repurchase the principal amount outstanding of the 2028 Senior Notes and the 2025 Senior Notes, excluding accrued interest, totaled $25.9 million and we recognized a $3.8 million gain on the extinguishment of this debt during the year ended December 31, 2022.
The aggregate redemption price for all 2023 Senior Notes approximated $517.5 million plus accrued and unpaid interest.
The aggregate redemption price for all 2025 Senior Notes approximated $664.5 million plus accrued and unpaid interest.
Year Ended December 31, 2022 2021 2020 (dollars per barrel, except as noted) Dated Brent crude oil $ 101.27 $ 70.89 $ 41.62 West Texas Intermediate (WTI) crude oil $ 94.58 $ 68.10 $ 39.25 Light Louisiana Sweet (LLS) crude oil $ 96.81 $ 69.59 $ 41.13 Alaska North Slope (ANS) crude oil $ 98.76 $ 70.56 $ 42.20 Crack Spreads Dated Brent (NYH) 2-1-1 $ 40.26 $ 16.84 $ 9.11 WTI (Chicago) 4-3-1 $ 31.56 $ 16.34 $ 6.30 LLS (Gulf Coast) 2-1-1 $ 37.56 $ 16.03 $ 7.59 ANS (West Coast-LA) 4-3-1 $ 41.64 $ 20.10 $ 11.30 ANS (West Coast-SF) 3-2-1 $ 41.89 $ 20.55 $ 9.99 Crude Oil Differentials Dated Brent (foreign) less WTI $ 6.68 $ 2.80 $ 2.37 Dated Brent less Maya (heavy, sour) $ 13.95 $ 6.47 $ 5.37 Dated Brent less WTS (sour) $ 6.98 $ 2.63 $ 2.33 Dated Brent less ASCI (sour) $ 9.68 $ 3.90 $ 1.81 WTI less WCS (heavy, sour) $ 21.30 $ 14.19 $ 10.72 WTI less Bakken (light, sweet) $ (4.05) $ (0.14) $ 2.41 WTI less Syncrude (light, sweet) $ (3.04) $ 2.25 $ 2.13 WTI less LLS (light, sweet) $ (2.22) $ (1.50) $ (1.88) WTI less ANS (light, sweet) $ (4.17) $ (2.46) $ (2.95) Natural gas (dollars per MMBTU) $ 6.54 $ 3.73 $ 2.13 2022 Compared to 2021 Overview— PBF Energy net income was $2,972.8 million for the year ended December 31, 2022 compared to net income of $315.5 million for the year ended December 31, 2021.
Year Ended December 31, 2023 2022 2021 (dollars per barrel, except as noted) Dated Brent crude oil $ 82.64 $ 101.27 $ 70.89 West Texas Intermediate (WTI) crude oil $ 77.67 $ 94.58 $ 68.10 Light Louisiana Sweet (LLS) crude oil $ 80.14 $ 96.81 $ 69.59 Alaska North Slope (ANS) crude oil $ 82.36 $ 98.76 $ 70.56 Crack Spreads Dated Brent (NYH) 2-1-1 $ 29.67 $ 40.26 $ 16.84 WTI (Chicago) 4-3-1 $ 23.71 $ 31.56 $ 16.34 LLS (Gulf Coast) 2-1-1 $ 29.13 $ 37.56 $ 16.03 ANS (West Coast-LA) 4-3-1 $ 36.88 $ 41.64 $ 20.10 ANS (West Coast-SF) 3-2-1 $ 36.89 $ 41.89 $ 20.55 Crude Oil Differentials Dated Brent (foreign) less WTI $ 4.97 $ 6.68 $ 2.80 Dated Brent less Maya (heavy, sour) $ 13.71 $ 13.95 $ 6.47 Dated Brent less WTS (sour) $ 4.99 $ 6.98 $ 2.63 Dated Brent less ASCI (sour) $ 5.73 $ 9.68 $ 3.90 WTI less WCS (heavy, sour) $ 18.32 $ 21.30 $ 14.19 WTI less Bakken (light, sweet) $ (1.28) $ (4.05) $ (0.14) WTI less Syncrude (light, sweet) $ (0.91) $ (3.04) $ 2.25 WTI less LLS (light, sweet) $ (2.48) $ (2.22) $ (1.50) WTI less ANS (light, sweet) $ (4.70) $ (4.17) $ (2.46) Effective RIN basket price $ 7.02 $ 7.66 $ 6.75 Natural gas (dollars per MMBTU) $ 2.66 $ 6.54 $ 3.73 2023 Compared to 2022 Overview— PBF Energy net income was $2,162.0 million for the year ended December 31, 2023 compared to net income of $2,972.8 million for the year ended December 31, 2022.
Our margins on the West Coast were negatively impacted from our refinery specific slate by a weakening WTI/ANS differential, which averaged a premium of $4.17 per barrel for the year ended December 31, 2022 as compared to a premium of $2.46 per barrel in the prior year. 77 Operating Expenses — Operating expenses totaled $2,599.0 million for the year ended December 31, 2022 compared to $2,085.9 million for the year ended December 31, 2021, an increase of approximately $513.1 million, or 24.6%.
Our margins on the West Coast were negatively impacted from our refinery specific slate by a weakening WTI/ANS differential, which averaged a premium of $4.70 per barrel for the year ended December 31, 2023 as compared to a premium of $4.17 per barrel in the prior year. 77 Operating expenses — Operating expenses totaled $2,694.9 million for the year ended December 31, 2023 compared to $2,599.0 million for the year ended December 31, 2022, an increase of approximately $95.9 million, or 3.7%.
During the year ended December 31, 2022, we made a number of open market repurchases of our 2028 Senior Notes and our 2025 Senior Notes that resulted in the extinguishment of $24.9 million in principal of the 2028 Senior Notes and $5.0 million in principal of the 2025 Senior Notes.
During the year ended December 31, 2021, we made a number of open market repurchases of our 2028 Senior Notes and our 2025 Senior Notes that resulted in the extinguishment of $173.5 million in principal of the 2028 Senior Notes and $55.5 million in principal of the 2025 Senior Notes.
Gain on Land Sales - During the year ended December 31, 2021, we recorded a gain on sale of PBFX real-property at the East Coast Terminals, which increased income from operations and net income by $2.8 million and $2.1 million, respectively.
During the year ended December 31, 2021, we recorded a gain on the sale of PBFX real-property at the East Coast Terminals, which increased income from operations and net income by $2.8 million and $2.1 million, respectively. There were no such gains in the year ended December 31, 2022.
The following table presents our GAAP calculation of gross margin and a reconciliation of gross refining margin to the most directly comparable GAAP financial measure, consolidated gross margin, on a historical basis, as applicable, for each of the periods indicated (in millions, except per barrel amounts): Year Ended December 31, 2022 2021 2020 $ per barrel of throughput $ per barrel of throughput $ per barrel of throughput Calculation of consolidated gross margin: Revenues $ 46,830.3 $ 138.69 $ 27,253.4 $ 89.46 $ 15,115.9 $ 56.76 Less: Cost of sales 42,151.7 124.84 26,366.2 86.55 16,745.6 62.88 Consolidated gross margin $ 4,678.6 $ 13.85 $ 887.2 $ 2.91 $ (1,629.7) $ (6.12) Reconciliation of consolidated gross margin to gross refining margin: Consolidated gross margin $ 4,678.6 $ 13.85 $ 887.2 $ 2.91 $ (1,629.7) $ (6.12) Add: PBFX operating expense 121.4 0.36 103.4 0.35 99.9 0.38 Add: PBFX depreciation expense 36.7 0.11 37.8 0.13 53.7 0.19 Less: Revenues of PBFX (369.3) (1.09) (355.5) (1.17) (360.3) (1.35) Add: Refinery operating expenses 2,495.6 7.39 1,999.1 6.56 1,835.2 6.89 Add: Refinery depreciation expense 466.9 1.38 415.7 1.36 498.0 1.87 Gross refining margin $ 7,429.9 $ 22.00 $ 3,087.7 $ 10.14 $ 496.8 $ 1.86 Special Items: (3) Add: Non-cash LCM inventory adjustment — — (669.6) (2.20) 268.0 1.01 Add: LIFO inventory decrement — — — — 83.0 0.31 Add: Early railcar return expense — — — — 12.5 0.05 Gross refining margin excluding special items $ 7,429.9 $ 22.00 $ 2,418.1 $ 7.94 $ 860.3 $ 3.23 —————————— See Notes to Non-GAAP Financial Measures. 83 EBITDA, EBITDA Excluding Special Items and Adjusted EBITDA Our management uses EBITDA (earnings before interest, income taxes, depreciation and amortization), EBITDA excluding special items and Adjusted EBITDA as measures of operating performance to assist in comparing performance from period to period on a consistent basis and to readily view operating trends, as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations, and in communications with our Board of Directors, creditors, analysts and investors concerning our financial performance.
The following table presents our GAAP calculation of gross margin and a reconciliation of gross refining margin to the most directly comparable GAAP financial measure, consolidated gross margin, on a historical basis, as applicable, for each of the periods indicated (in millions, except per barrel amounts): Year Ended December 31, 2023 2022 2021 $ per barrel of throughput $ per barrel of throughput $ per barrel of throughput Calculation of consolidated gross margin: Revenues $ 38,324.8 $ 116.48 $ 46,830.3 $ 138.69 $ 27,253.4 $ 89.46 Less: Cost of sales 35,926.2 109.19 42,151.7 124.84 26,366.2 86.55 Consolidated gross margin $ 2,398.6 $ 7.29 $ 4,678.6 $ 13.85 $ 887.2 $ 2.91 Reconciliation of consolidated gross margin to gross refining margin: Consolidated gross margin $ 2,398.6 $ 7.29 $ 4,678.6 $ 13.85 $ 887.2 $ 2.91 Add: PBFX operating expense 131.9 0.40 121.4 0.36 103.4 0.35 Add: PBFX depreciation expense 36.1 0.11 36.7 0.11 37.8 0.13 Less: Revenues of PBFX (384.1) (1.17) (369.3) (1.09) (355.5) (1.17) Add: Refinery operating expenses 2,581.3 7.85 2,495.6 7.39 1,999.1 6.56 Add: Refinery depreciation expense 523.9 1.59 466.9 1.38 415.7 1.36 Gross refining margin $ 5,287.7 $ 16.07 $ 7,429.9 $ 22.00 $ 3,087.7 $ 10.14 Special Items: (3) Add: LCM inventory adjustment — — — — (669.6) (2.20) Gross refining margin excluding special items $ 5,287.7 $ 16.07 $ 7,429.9 $ 22.00 $ 2,418.1 $ 7.94 —————————— See Notes to Non-GAAP Financial Measures. 83 EBITDA, EBITDA Excluding Special Items and Adjusted EBITDA Our management uses earnings before interest, income taxes, depreciation and amortization (“EBITDA”), EBITDA excluding special items and Adjusted EBITDA as measures of operating performance to assist in comparing performance from period to period on a consistent basis and to readily view operating trends, as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations, and in communications with our Board of Directors, creditors, analysts and investors concerning our financial performance.
We had available capacity under revolving credit facilities as follows at December 31, 2022 (in millions): Total Commitment Amount Borrowed as of December 31, 2022 Outstanding Letters of Credit Borrowing Base Availability Expiration Date Revolving Credit Facility (a) $ 4,300.0 $ — $ 576.1 $ 4,300.0 January 2025 PBFX Revolving Credit Facility 500.0 — 3.5 496.5 July 2023 Total Credit Facilities $ 4,800.0 $ — $ 579.6 $ 4,796.5 ___________________________________ (a) The amount available for borrowings and letters of credit under the Revolving Credit Facility is calculated according to a “borrowing base” formula based on (i) 90% of the book value of Eligible Accounts with respect to investment grade obligors plus (ii) 85% of the book value of Eligible Accounts with respect to non-investment grade obligors plus (iii) 80% of the cost of Eligible Hydrocarbon Inventory plus (iv) 100% of Cash and Cash Equivalents in deposit accounts subject to a control agreement, in each case as defined in the Revolving Credit Agreement.
We had available capacity under our Revolving Credit Facility as follows at December 31, 2023 (in millions): Total Commitment Amount Borrowed as of December 31, 2023 Outstanding Letters of Credit Borrowing Base Availability Expiration Date Revolving Credit Facility (a) $ 3,500.0 $ — $ 55.0 $ 3,445.0 August 2028 ___________________________________ (a) The amount available for borrowings and letters of credit under the Revolving Credit Facility is calculated according to a “borrowing base” formula based on (i) 90% of the book value of Eligible Accounts with respect to investment grade obligors plus (ii) 85% of the book value of Eligible Accounts with respect to non-investment grade obligors plus (iii) 80% of the cost of Eligible Hydrocarbon Inventory plus (iv) 100% of Cash and Cash Equivalents in deposit accounts subject to a control agreement, in each case as defined in the Revolving Credit Agreement.
We define light crude oil as crude oil with an API gravity higher than 35 degrees. 74 The table below summarizes certain market indicators relating to our operating results as reported by Platts, a division of The McGraw-Hill Companies.
We define light crude oil as crude oil with an API gravity higher than 35 degrees. 74 The table below summarizes certain market indicators relating to our operating results as reported by Platts, a division of The McGraw-Hill Companies. Effective RIN basket price is recalculated based on information as reported by Argus.
Cash Flow Analysis Cash Flows from Operating Activities Net cash provided by operating activities was $4,772.0 million for the year ended December 31, 2022 compared to net cash provided by operating activities of $477.3 million for the year ended December 31, 2021.
Cash Flow Analysis Cash Flows from Operating Activities Net cash provided by operating activities was $1,338.5 million for the year ended December 31, 2023 compared to net cash provided by operating activities of $4,772.0 million for the year ended December 31, 2022.
Some of these limitations include that EBITDA, EBITDA excluding special items and Adjusted EBITDA: • do not reflect depreciation expense or our cash expenditures, or future requirements, for capital expenditures or contractual commitments; • do not reflect changes in, or cash requirements for, our working capital needs; • do not reflect our interest expense, or the cash requirements necessary to service interest or principal payments, on our debt; • do not reflect realized and unrealized gains and losses from certain hedging activities, which may have a substantial impact on our cash flow; • do not reflect certain other non-cash income and expenses; and • exclude income taxes that may represent a reduction in available cash. 84 The following tables reconcile net income (loss) as reflected in PBF Energy’s results of operations to EBITDA, EBITDA excluding special items and Adjusted EBITDA for the periods presented (in millions): Year Ended December 31, 2022 2021 2020 Reconciliation of net income (loss) to EBITDA and EBITDA excluding special items: Net income (loss) $ 2,972.8 $ 315.5 $ (1,333.3) Add: Depreciation and amortization expense 511.1 466.8 563.0 Add: Interest expense, net 246.0 317.5 258.2 Add: Income tax expense 584.8 12.1 2.1 EBITDA $ 4,314.7 $ 1,111.9 $ (510.0) Special Items: (3) Add: Non-cash LCM inventory adjustment — (669.6) 268.0 Add: Change in fair value of contingent consideration, net 48.3 32.4 (93.7) Add: Gain on sale of hydrogen plants — — (471.1) Add: Gain on land sales — (2.8) (8.1) Add: Impairment expense — — 98.8 Add: LIFO inventory decrement — — 83.0 Add: Severance and reconfiguration costs — — 30.0 Add: Early railcar return expense — — 12.5 Add: Loss (gain) on extinguishment of debt 66.1 (79.9) 22.2 Add: Change in Tax Receivable Agreement liability 290.3 48.3 (373.5) EBITDA excluding special items $ 4,719.4 $ 440.3 $ (941.9) Reconciliation of EBITDA to Adjusted EBITDA: EBITDA $ 4,314.7 $ 1,111.9 $ (510.0) Add: Stock based compensation 54.3 35.6 34.2 Add: Change in fair value of catalyst obligations 2.0 (8.5) 11.8 Add: Non-cash LCM inventory adjustment (3) — (669.6) 268.0 Add: Change in fair value of contingent consideration, net (3) 48.3 32.4 (93.7) Add: Gain on sale of hydrogen plants (3) — — (471.1) Add: Gain on land sales (3) — (2.8) (8.1) Add: Impairment expense (3) — — 98.8 Add: LIFO inventory decrement (3) — — 83.0 Add: Severance and reconfiguration costs (3) — — 30.0 Add: Early railcar return expense (3) — — 12.5 Add: Loss (gain) on extinguishment of debt (3) 66.1 (79.9) 22.2 Add: Change in Tax Receivable Agreement liability (3) 290.3 48.3 (373.5) Adjusted EBITDA $ 4,775.7 $ 467.4 $ (895.9) —————————— See Notes to Non-GAAP Financial Measures. 85 Net Debt to Capitalization Ratio and Net Debt to Capitalization Ratio Excluding Special Items The total debt to capitalization ratio is calculated by dividing total debt by the sum of total debt and total equity.
Some of these limitations include that EBITDA, EBITDA excluding special items and Adjusted EBITDA: • do not reflect depreciation expense or our cash expenditures, or future requirements, for capital expenditures or contractual commitments; • do not reflect changes in, or cash requirements for, our working capital needs; • do not reflect our interest expense, or the cash requirements necessary to service interest or principal payments, on our debt; • do not reflect realized and unrealized gains and losses from certain hedging activities, which may have a substantial impact on our cash flow; • do not reflect certain other non-cash income and expenses; and • exclude income taxes that may represent a reduction in available cash. 84 The following tables reconcile net income as reflected in PBF Energy’s results of operations to EBITDA, EBITDA excluding special items and Adjusted EBITDA for the periods presented (in millions): Year Ended December 31, 2023 2022 2021 Reconciliation of net income to EBITDA and EBITDA excluding special items: Net income $ 2,162.0 $ 2,972.8 $ 315.5 Add: Depreciation and amortization expense 571.5 511.1 466.8 Add: Interest expense, net 63.8 246.0 317.5 Add: Income tax expense 723.8 584.8 12.1 EBITDA $ 3,521.1 $ 4,314.7 $ 1,111.9 Special Items: (3) Add: LCM inventory adjustment — — (669.6) Add: LCM inventory adjustment - SBR 38.7 — — Add: Change in fair value of contingent consideration, net (45.8) 48.3 32.4 Add: Gain on land sales (1.7) — (2.8) Add: Loss (gain) on extinguishment of debt 5.7 66.1 (79.9) Add: Change in Tax Receivable Agreement liability (2.0) 290.3 48.3 Add: Gain on formation of SBR equity method investment (925.1) — — EBITDA excluding special items $ 2,590.9 $ 4,719.4 $ 440.3 Reconciliation of EBITDA to Adjusted EBITDA: EBITDA $ 3,521.1 $ 4,314.7 $ 1,111.9 Add: Stock based compensation 51.5 54.3 35.6 Add: Change in fair value of catalyst obligations (1.1) 2.0 (8.5) Add: LCM inventory adjustment (3) — — (669.6) Add: LCM inventory adjustment - SBR (3) 38.7 — — Add: Change in fair value of contingent consideration, net (3) (45.8) 48.3 32.4 Add: Gain on land sales (3) (1.7) — (2.8) Add: Loss (gain) on extinguishment of debt (3) 5.7 66.1 (79.9) Add: Change in Tax Receivable Agreement liability (3) (2.0) 290.3 48.3 Add: Gain on formation of SBR equity method investment (3) (925.1) — — Adjusted EBITDA $ 2,641.3 $ 4,775.7 $ 467.4 —————————— See Notes to Non-GAAP Financial Measures. 85 Net Debt to Capitalization Ratio and Net Debt to Capitalization Ratio Excluding Special Items The total debt to capitalization ratio is calculated by dividing total debt by the sum of total debt and total equity.
Net income attributable to PBF Energy stockholders was $2,876.8 million, or $22.84 per diluted share, for the year ended December 31, 2022 ($22.84 per share on a fully-exchanged, fully-diluted basis based on adjusted fully-converted net income, or $23.36 per share on a fully-exchanged, fully-diluted basis based on adjusted fully-converted net income excluding special items, as described below in Non-GAAP Financial Measures) compared to net income attributable to PBF Energy stockholders of $231.0 million, or $1.90 per diluted share, for the year ended December 31, 2021 ($1.90 per share on a fully-exchanged, fully-diluted basis based on adjusted fully-converted net income, or $(2.50) per share on a fully-exchanged, fully-diluted basis based on adjusted fully-converted net loss excluding special items, as described below in Non-GAAP Financial Measures).
Net income attributable to PBF Energy stockholders was $2,140.5 million, or $16.52 per diluted share, for the year ended December 31, 2023 ($16.52 per share on a fully-exchanged, fully-diluted basis based on adjusted fully-converted net income, or $11.32 per share on a fully-exchanged, fully-diluted basis based on adjusted fully-converted net income excluding special items, as described below in Non-GAAP Financial Measures) compared to net income attributable to PBF Energy stockholders of $2,876.8 million, or $22.84 per diluted share, for the year ended December 31, 2022 ($22.84 per share on a fully-exchanged, fully-diluted basis based on adjusted fully-converted net income, or $23.36 per share on a fully-exchanged, fully-diluted basis based on adjusted fully-converted net income excluding special items, as described below in Non-GAAP Financial Measures).
Our margins were positively impacted from our refinery specific slate on the East Coast by strengthened Dated Brent/Maya differential, which increased by $7.48 per barrel, offset by weakened WTI/Bakken differential, which decreased by $3.91 per barrel compared to the same period in 2021.
Our margins were positively impacted from our refinery specific slate on the East Coast by strengthened WTI/Bakken differential, which increased by $2.77 per barrel, offset by weakened Dated Brent/Maya differential, which decreased by $0.24 per barrel compared to the same period in 2022.
Additionally, the WTI/Syncrude differential averaged a premium of $3.04 per barrel for the year ended December 31, 2022 as compared to a discount of $2.25 per barrel in the prior year.
Additionally, the WTI/Syncrude differential averaged a premium of $0.91 per barrel for the year ended December 31, 2023 as compared to a premium of $3.04 per barrel in the prior year.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

12 edited+1 added−4 removed9 unchanged
Biggest changeITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this item is set forth beginning on page F-1 of this Annual Report on Form 10-K. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.
Biggest changeAs of December 31, 2023 and December 31, 2022, only one customer, Shell, accounted for 10% or more of our total trade accounts receivable (approximately 19% and 19%, respectively). ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this item is set forth beginning on page F-1 of this Annual Report on Form 10-K. ITEM 9.
The open commodity derivative contracts as of December 31, 2022 expire at various times during 2023. We carry inventories of crude oil, intermediates and refined products (“hydrocarbon inventories”) on our Consolidated Balance Sheets, the values of which are subject to fluctuations in market prices.
The open commodity derivative contracts as of December 31, 2023 expire at various times during 2024. We carry inventories of crude oil, intermediates and refined products (“hydrocarbon inventories”) on our Consolidated Balance Sheets, the values of which are subject to fluctuations in market prices.
At December 31, 2022 and December 31, 2021, the replacement value of inventory exceeded the LIFO carrying value. If market prices of our inventory decline to a level below our average cost, we may be required to write down the carrying value of our hydrocarbon inventories to market.
At December 31, 2023 and December 31, 2022, the replacement value of inventory exceeded the LIFO carrying value. If market prices of our inventory decline to a level below our average cost, we may be required to write down the carrying value of our hydrocarbon inventories to market.
Interest Rate Risk The maximum commitment under our Revolving Credit Facility is $4.3 billion. Borrowings under the Revolving Credit Facility bear interest either at the Alternative Base Rate plus the Applicable Margin or at the Term SOFR Rate plus the Applicable Margin, all as defined in the Revolving Credit Agreement.
Interest Rate Risk The maximum commitment under our Revolving Credit Facility is $3.5 billion. Borrowings under the Revolving Credit Facility bear interest either at the Alternative Base Rate plus the Applicable Margin or at the Term SOFR plus the Applicable Margin, all as defined in the Revolving Credit Agreement.
In addition, we are exposed to risks associated with complying with federal and state legislative and regulatory measures to address greenhouse gas and other emissions. Requirements to reduce emissions could result in increased costs to operate and maintain our facilities as well as implement and manage new emission controls and programs put in place.
In addition, we are exposed to risks associated with complying with federal and state legislative and regulatory measures to address GHG and other emissions. Requirements to reduce emissions could result in increased costs to operate and maintain our facilities as well as implement and manage new emission controls and programs put in place.
To mitigate the impact of the market risk relating to our obligations on our results of operations and cash flows, we may elect to purchase RINs or other environmental credits as part of our liability management strategy.
To mitigate the impact of the market risk relating to our obligations on our results of operations and cash flows, we may elect to purchase RINs or other environmental credits as part of our liability management strategy. We also have the ability to purchase RINs directly from SBR.
We mark-to-market our commodity derivative instruments and recognize the changes in their fair value in our statements of operations. 104 At December 31, 2022 and December 31, 2021, we had gross open commodity derivative contracts representing 30.1 million barrels and 42.1 million barrels, respectively, with an unrealized net gain of $13.9 million and unrealized net loss of $12.0 million, respectively.
We mark-to-market our commodity derivative instruments and recognize the changes in their fair value in our statements of operations. At December 31, 2023 and December 31, 2022, we had gross open commodity derivative contracts representing 29.1 million barrels and 30.1 million barrels, respectively, with an unrealized net gain of $33.2 million and $13.9 million, respectively.
Our hydrocarbon inventories totaled approximately 32.8 million barrels and 30.2 million barrels at December 31, 2022 and December 31, 2021, respectively. The average cost of our hydrocarbon inventories was approximately $80.04 and $78.29 per barrel on a LIFO basis at December 31, 2022 and December 31, 2021, respectively.
Our hydrocarbon inventories totaled approximately 36.2 million barrels and 32.8 million barrels at December 31, 2023 and December 31, 2022, respectively. The average cost of our hydrocarbon inventories was approximately $83.64 and $80.04 per barrel on a LIFO basis at December 31, 2023 and December 31, 2022, respectively.
Our predominant variable operating cost is energy, which is comprised primarily of natural gas and electricity. We are therefore sensitive to movements in natural gas prices. Assuming normal operating conditions, we annually consume a total of between 75 million and 95 million MMBTUs of natural gas amongst our six refineries.
Our predominant variable operating cost is energy, which is comprised primarily of natural gas and electricity. We are therefore sensitive to movements in natural gas prices. Assuming normal operating conditions, we expect our annual consumption to range from 75 million to 95 million MMBTUs of natural gas amongst our six refineries.
At December 31, 2022, we had no outstanding balance in variable interest debt. If this facility was fully drawn, a 1.0% change in the interest rate would increase or decrease our interest expense by approximately $25.6 million annually.
At December 31, 2023, we had no outstanding balance in variable interest debt. If this facility was fully drawn, a 1.0% change in the interest rate would increase or decrease our interest expense by approximately $23.7 million annually. Credit Risk We are subject to risk of losses resulting from nonpayment or nonperformance by our counterparties.
Compliance Program Price Risk We are exposed to market risks related to our obligations to buy and the volatility in the price of credits needed to comply with various governmental and regulatory compliance programs, which includes RINs, required to comply with the RFS.
Accordingly, a $1.00 per MMBTU change in natural gas prices would increase or decrease our natural gas costs by approximately $75.0 million to $95.0 million. 101 Compliance Program Price Risk We are exposed to market risks related to our obligations to buy and the volatility in the price of credits needed to comply with various governmental and regulatory compliance programs, which include RINs, required to comply with the RFS.
Concentration Risk For the years ended December 31, 2022 and December 31, 2021, only one customer, Shell, accounted for 10% or more of our revenues (approximately 14% and 15%, respectively). As of December 31, 2022 and December 31, 2021, only one customer, Shell, accounted for 10% or more of our total trade accounts receivable (approximately 19% and 26%, respectively).
We continue to closely monitor the creditworthiness of customers to whom we grant credit and establish credit limits in accordance with our credit policy. Concentration Risk For the years ended December 31, 2023 and December 31, 2022, only one customer, Shell, accounted for 10% or more of our revenues (approximately 14% and 14%, respectively).
Removed
Accordingly, a $1.00 per MMBTU change in natural gas prices would increase or decrease our natural gas costs by approximately $75.0 million to $95.0 million.
Added
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 102
Removed
The PBFX Revolving Credit Facility, with a maximum commitment of $500.0 million, bears interest either at the Alternative Base Rate plus the Applicable Margin or at Adjusted LIBOR plus the Applicable Margin, all as defined in the PBFX Revolving Credit Agreement. At December 31, 2022, PBFX had no outstanding balance in variable interest debt.
Removed
If this facility was fully drawn, a 1.0% change in the interest rate would increase or decrease our interest expense by approximately $3.7 million annually. 105 We also have interest rate exposure in connection with our Third Inventory Intermediation Agreement under which we pay a time value of money charge based on LIBOR.
Removed
Credit Risk We are subject to risk of losses resulting from nonpayment or nonperformance by our counterparties. We continue to closely monitor the creditworthiness of customers to whom we grant credit and establish credit limits in accordance with our credit policy.

Other PBF 10-K year-over-year comparisons