PBF Energy 2013 Annual Report Download - page 151

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PBF ENERGY INC. AND
PBF HOLDING COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)
F- 55
There were no transfers between levels during the years ended December 31, 2013 and 2012, respectively.
Fair value of debt
The table below summarizes the fair value and carrying value as of December 31, 2013 and 2012.
December 31, 2013 December 31, 2012
Carrying
value
Fair
value
Carrying
value
Fair
value
Senior Secured Notes (a) $ 667,487 $ 697,568 $ 666,538 $ 700,963
Revolver (b) 15,000 15,000 — —
Catalyst leases (c) 53,089 53,089 43,442 43,442
735,576 765,657 709,980 744,405
Less - Current maturities 12,029 12,029 — —
Long-term debt $ 723,547 $ 753,628 $ 709,980 $ 744,405
(a) The estimated fair value, categorized as a Level 2 measurement, was calculated based on the present value of
future expected payments utilizing implied current market interest rates based on quoted prices of the Senior
Secured Notes.
(b) The estimated fair value approximates carrying value, categorized as a Level 2 measurement, as these borrowings
bear interest based upon short-term floating market interest rates.
(c) Catalyst leases are valued using a market approach based upon commodity prices for similar instruments quoted
in active markets and are categorized as a Level 2 measurement. The Company has elected the fair value option
for accounting for its catalyst lease repurchase obligations as the Company's liability is directly impacted by the
change in fair value of the underlying catalyst.
21. DERIVATIVES
The Company uses derivative instruments to mitigate certain exposures to commodity price risk. The Company’s
crude supply agreements contain purchase obligations for certain volumes of crude oil and other feedstocks. In
addition, the Company entered into Inventory Intermediation Agreements commencing in July 2013 that contain
purchase obligations for certain volumes of intermediates and refined products. The Company was also party to
an agreement that contained purchase obligations for certain volumes of stored intermediates inventory during the
year ended December 31, 2012, which was terminated during the first quarter of 2012. The purchase obligations
related to crude oil, feedstocks, intermediates and refined products under these agreements are derivative
instruments that have been designated as fair value hedges in order to hedge the commodity price volatility of
certain refinery inventory. The fair value of these purchase obligation derivatives is based on market prices of
crude oil and refined products in the future. The level of activity for these derivatives is based on the level of
operating inventories.
As of December 31, 2013, there were 838,829 barrels of crude oil and feedstocks (2,529,447 barrels at December 31,
2012) outstanding under these derivative instruments designated as fair value hedges and no barrels (no barrels at
December 31, 2012) outstanding under these derivative instruments not designated as hedges. As of December 31,
2013, there were 3,274,047 barrels of intermediates and refined products (no barrels at December 31, 2012)
outstanding under these derivative instruments designated as fair value hedges and no barrels (no barrels at
December 31, 2012) outstanding under these derivative instruments not designated as hedges. These volumes
represent the notional value of the contract.