PBF Energy 2013 Annual Report Download - page 70

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City refineries averaged approximately 149,800 bpd, 159,000 bpd, and 162,100 bpd, respectively. For the year
ended December 31, 2011, the total barrels sold at our Paulsboro, Toledo, and Delaware City refineries averaged
approximately 151,700 bpd, 160,800 bpd, and 116,200 bpd, respectively.
The throughput rate and barrels sold for our Toledo and Delaware City refineries for the year ended
December 31, 2011 reflect the period from March 1 to December 31 and June 1 to December 31, respectively.
Total barrels sold during the year ended December 31, 2012 were approximately 172.3 million barrels at an average
price of $116.83 per barrel, compared to 129.4 million barrels at an average price of $115.83 per barrel during the
2011 period.
Gross Margin—Gross refining margin totaled $1,869.6 million, or $11.03 per barrel of throughput, for the
year ended December 31, 2012 compared to $1,105.2 million, or $8.59 per barrel of throughput during the year
ended December 31, 2011, an increase of $764.4 million. Gross margin totaled $1,046.6 million, or $6.17 per
barrel of throughput, for the year ended December 31, 2012 compared to $418.0 million, or $3.25 per barrel of
throughput, for the year ended December 31, 2011, an increase of $628.6 million. The increase in both gross
refining margin and gross margin was primarily due to a full twelve months of operations at the Toledo and Delaware
City refineries in 2012 and higher crack spreads.
Average industry refining margins in the U.S. Mid-Continent were generally stronger during the year ended
December 31, 2012 as compared to the same period in 2011. The WTI (Chicago) 4-3-1 industry crack spread was
approximately $2.99 per barrel or 12.0% higher in the year ended December 31, 2012 as compared to the same
period in 2011. During the year ended December 31, 2012, we believe the strong industry refining margins and
crude oil price differentials reflect limitations on takeaway capacity of WTI crude stored at Cushing, Oklahoma
and the increase in domestically available supply which decreased the price of WTI versus Dated Brent and other
crudes. The WTI-Syncrude differential improved by $10.75 per barrel during the year ended December 31, 2012
compared to the same period in 2011. As the WTI-Syncrude premium increases, it has a positive impact on our
Toledo refinery’s gross margin because Syncrude represents a significant portion of its crude slate.
While the Dated Brent (NYH) 2-1-1 industry crack spread was approximately $4.36 per barrel, or 43.9%,
higher in the year ended December 31, 2012 as compared to the same period in 2011, the Dated Brent/Maya
differential was approximately $0.59 per barrel, or approximately 4.7%, lower in 2012 than in 2011. A reduction
in the Dated Brent/Maya crude differential, our proxy for the light/heavy crude differential, has a negative impact
on Paulsboro and Delaware City as both refineries process a large slate of medium and heavy, sour crude oil that
is priced at a discount to light, sweet crude oil.
The increase in our gross refining margin per barrel to $11.03 per barrel for the year ended December 31,
2012 from $8.59 per barrel during the same period in 2011 was primarily driven by improved crack spreads and
lower cost of crude at our Toledo refinery, partially offset by an unfavorable increase in the landed cost of crude
at our East Coast refineries due to the narrowing of the light/heavy crude differential. In addition, the results of
our Paulsboro and Delaware City refineries is compounded by their significant production of low value products
such as sulfur, petroleum coke and fuel oils as these products price at a substantial discount to light products. As
a result, we were not able to fully benefit from the increase in gasoline and distillates prices during the twelve
month period.
Operating Expenses—Operating expenses totaled $738.8 million, or $4.36 per barrel of throughput, for the
year ended December 31, 2012 compared to $658.8 million, or $5.12 per barrel of throughput, for the year ended
December 31, 2011, an increase of $80.0 million, or 12.1%. The increase in operating expenses primarily relates
to having Toledo for a full twelve months in the 2012 period versus ten months in 2011, and the restart of the
Delaware City refinery. During the first nine months of the 2011 period, our Delaware City refinery was undergoing
a turnaround and reconfiguration. It was fully operational during the full year ended December 31, 2012. The
decrease in operating expenses per barrel of throughput is mainly attributable to a reduction in energy and utilities
costs, primarily driven by lower natural gas prices, and the increase in throughput barrels. Our operating expenses
principally consist of salaries and employee benefits, maintenance, energy and catalyst and chemicals costs.