PBF Energy 2012 Annual Report Download - page 77

securing or otherwise related to the foregoing, all general intangibles, chattel paper, instruments, documents,
letter of credit rights and supporting obligations; and all products and proceeds of the foregoing, (collectively, the
“Revolving Loan Priority Collateral”). As a result of the payment in full of the Term Loan Facility, the Paulsboro
Promissory Note and the Toledo Promissory Note with the net cash proceeds of the senior secured notes offering
in February 2012, the ABL Revolving Credit Facility is now secured solely by the Revolving Loan Priority
Collateral and the lien on the other assets previously part of the ABL Revolving Credit Facility collateral was
released.
Letter of Credit Facility
PBF Holding, Paulsboro Refining and Delaware City Refining were party to a letter of credit facility with
BNP Paribas (Suisse) SA, or BNP. The letter of credit facility was terminated in December 2012.
Cash Balances
As of December 31, 2012, our cash and cash equivalents totaled $285.9 million. We also had $12.1 million
in restricted cash, which was included within deferred charges and other assets, net on our balance sheet. The
restricted cash represents a trust fund we acquired in connection with the Paulsboro refinery acquisition and
represents the estimated cost of environmental remediation obligations assumed.
Liquidity
As of December 31, 2012, our total liquidity, which is the sum of our cash and cash equivalents plus the
amount of availability under the ABL Revolving Credit Facility, totaled approximately $599.2 million.
Working Capital
Working capital at December 31, 2012 was $704.8 million, consisting of $2,307.9 million in total current
assets and $1,603.1 million in total current liabilities. Working capital at December 31, 2011 was $286.4 million,
consisting of $1,946.5 million in total current assets and $1,660.1 million in total current liabilities. Our working
capital for financial reporting purposes is significantly impacted by the way we account for our crude and
feedstock and product offtake agreements as more fully described below.
Crude and Feedstock Supply Agreements
We acquire crude oil for our Paulsboro and Delaware City refineries under supply agreements whereby
Statoil generally purchases the crude oil requirements for each refinery on our behalf and under our direction.
Our agreement with Statoil for Paulsboro will terminate effective March 31, 2013, at which time we plan to
source Paulsboro’s crude oil and feedstocks internally. We amended our agreement with Statoil for Delaware
City in 2012 and the term was extended by Statoil through December 31, 2015. Statoil generally provides
transportation and logistics services, risk management services and holds title to the crude oil until we purchase it
as it enters the refinery process units. For our purchases of Saudi crude oil, we post letters of credit and arrange
for shipment. We pay for the crude when we are invoiced and the letter of credit is lifted. Under the Statoil
agreements, the amount of crude oil we own and the time we are exposed to market fluctuations is substantially
reduced. Under generally accepted accounting principles we record the inventory owned by Statoil on our behalf
as inventory with a corresponding accrued liability on our balance sheet because we have risk of loss while the
Statoil inventory is in our storage tanks and because we have an obligation to repurchase Statoil’s inventory upon
termination of the agreements at the then market value.
We have a similar agreement with MSCG to supply the crude oil requirements for our Toledo refinery,
under which we take title to MSCG’s crude oil at certain interstate pipeline delivery locations. Payment for the
crude oil under the Toledo agreement is due three days after it is processed by us or sold to third parties. We do
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