PBF Energy 2012 Annual Report Download - page 29

these pipelines to transport crude oil or refined products is disrupted because of accidents, weather interruptions,
governmental regulation, terrorism, other third party action or any of the types of events described in the
preceding risk factor.
In addition, due to the common carrier regulatory obligation applicable to interstate oil pipelines, capacity is
prorated among shippers in accordance with the tariff then in effect in the event there are nominations in excess
of capacity. Therefore, nominations by new shippers or increased nominations by existing shippers may reduce
the capacity available to us. Any prolonged interruption in the operation or curtailment of available capacity of
the pipelines that we rely upon for transportation of crude oil and refined products could have a further material
adverse effect on our business, financial condition, results of operations and cash flows.
We may have capital needs for which our internally generated cash flows and other sources of liquidity may
not be adequate.
If we cannot generate sufficient cash flows or otherwise secure sufficient liquidity to support our short-term
and long-term capital requirements, we may not be able to meet our payment obligations (including any earn-
outs), or our future debt obligations, comply with certain deadlines related to environmental regulations and
standards, or pursue our business strategies, in which case our operations may not perform as we currently
expect. 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 refined products inventory not
covered by our various supply and products offtake agreements. We terminated our agreement with Statoil for
our Paulsboro refinery effective March 31, 2013 and our MSCG Offtake Agreements for our Paulsboro and
Delaware City refineries effective June 30, 2013. If we cannot adequately handle our crude oil and feedstock
requirements without the benefit of the Statoil arrangement at Paulsboro, or if we are required to obtain our crude
oil supply at our other refineries without the benefit of the existing supply arrangements or the applicable
counterparty defaults in its obligations, our crude oil pricing costs may increase as the number of days between
when we pay for the crude oil and when the crude oil is delivered to us increases. Further, if we are not able to
market and sell our finished products to credit worthy customers without benefit of the MSCG Offtake
Agreements, we may be subject to delays in the collection of our accounts receivable and exposure to additional
credit risk. Such increased exposure could negatively impact our liquidity due to our increased working capital
needs as a result of the increase in the amount of crude oil inventory and accounts receivable we would have to
carry on our balance sheet. Our long-term needs for cash include those to support ongoing capital expenditures
for equipment maintenance and upgrades during turnarounds at our refineries and to complete our routine and
normally scheduled maintenance, regulatory and security expenditures. In addition, from time to time, we are
required to spend significant amounts for repairs when one or more processing units experiences temporary
shutdowns. We continue to utilize significant capital to upgrade equipment, improve facilities, and reduce
operational, safety and environmental risks. In connection with the Paulsboro acquisition, we assumed certain
significant environmental obligations, and may similarly do so in future acquisitions. We will likely incur
substantial compliance costs in connection with new or changing environmental, health and safety regulations.
See “Item 7. Management’s Discussion and Analysis of Financial Condition.” Our liquidity will affect our ability
to satisfy any of these needs or obligations.
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.
Global financial markets and economic conditions have been, and continue to be, disrupted and volatile due
to a variety of factors, including uncertainty in the financial services sector, low consumer confidence, continued
high unemployment, geopolitical issues and the current weak economic conditions. In addition, the fixed income
markets have experienced periods of extreme volatility that have negatively impacted market liquidity
conditions. As a result, the cost of raising money in the debt and equity capital markets has increased
substantially at times while the availability of funds from those markets diminished significantly. In particular, as
a result of concerns about the stability of financial markets generally and the solvency of lending counterparties
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