Q4 2021 PBF Energy Inc Earnings Call

[music].

Yeah.

Good day everyone.

Speaker 1: Good day everyone and welcome to the PBS Energy 4th Quarter 2021 Earnings Conference call and webcast.

And welcome to the PBF energy fourth quarter, 2021 earnings conference call and webcast.

At this time, all participants have been placed in a listen only mode and the floor will be opened for your questions. Following management's prepared remarks.

Speaker 1: At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following management's prepared remarks.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

Speaker 1: If anyone should require operator assistance during a conference, please press star 0 on your telephone keypad.

Please note this conference is being recorded.

It is now my pleasure.

Speaker 1: It is now my pleasure to turn the floor over to Colin Murray of Investor Relations.

To turn the floor over to Colin Murray of Investor Relations.

Sir you may begin.

Thank you Vikram.

Speaker 2: Thank you Bikram. Good morning and welcome to today's call. With me today are Tom Nimley, our CEO , Matt Lucey, our President, Eric Young, our CFO , and several other members of our management team.

And welcome to today's call with me today are Tom Nimbly, our CEO , Matt Lucey, our president.

Erik Young our CFO and several other members of our management team.

Copy of today's earnings release, including supplemental information is available on our website before getting started I'd like to direct your attention to the safe Harbor statement contained in today's press release.

Speaker 2: A copy of today's earnings release, including supplemental information, is available on our website. Before getting started, I'd like to direct your attention to the Safe Harbor Statement contained in today's press release.

Statements in our press release and those made on this call that express the company's or management's expectations or predictions of the future are forward looking statements intended to be covered by the safe Harbor provisions under federal Securities laws. There are many factors that could cause actual results to differ from our expectations, including those we just.

Speaker 2: The statements in our press release and those made on this call that express the companies or management's expectations or predictions of the future are forward-looking statements intended to be covered by the safe harbor provisions under federal securities laws. There are many factors that could cause actual results to differ from our expectations, including those we describe in our filings with the SEC.

Scribe in our filings with the SEC.

For information or PBF energy and PBF logistics 10-K report should be available in a week's time.

Speaker 2: For information, our PBS Energy and PBS Logistics 10K report should be available in a week's time.

Consistent with our prior periods, we will discuss our results today, excluding special items in today's press release, we described the noncash special items included in our fourth quarter 2021 results.

Speaker 2: Consistent with our prior periods, we will discuss our results today, excluding special items. In today's press release, we describe the non-cash special items included in our fourth quarter 2021 results.

Speaker 2: The cumulative impact of the special items increase net income by an after-tax benefit of $9.8 million or $0.08 per share. Included in that number are the effects of the re-measurement of deferred tax assets, which resulted in a tax benefit for the quarter.

Cumulative impact of the special items increased net income by an after tax benefit of $9 $8 million or eight cents per share included in that number are the effects of the remeasurement of deferred tax assets, which resulted in a tax benefit for the quarter.

There are a number of other notable items included in our results that Eric will highlight in his remarks.

Speaker 2: There are a number of other notable items included in our results that Eric will highlight in his remarks.

For reconciliations of any non-GAAP measures mentioned on today's call. Please refer to the supplemental tables provided in today's press release I'll now turn the call over to Tom Nimbly.

Speaker 2: For reconciliations of any non-GAAP measures mentioned on today's call, please refer to the supplemental tables provided in today's press release. I'll now turn the call over to Tom Nesbitt.

Thanks, Colin good morning, everyone and thank you for joining our call.

Speaker 3: Thanks, Colin. Good morning, everyone, and thank you for joining our call.

Today, we reported fourth quarter, earning.

Speaker 3: Today we reported fourth quarter earnings of $1.28 per share and adjusted net income of $157 million.

Earnings of $1 28 per share and adjusted net income of $157 million.

Before commenting on the macro environment.

I would like to thank all of our PBF employees and all of those who work alongside us inside and outside of our refinery and terminal dates for.

Speaker 3: I would like to thank all of our PPF employees and all those who worked alongside us inside and outside of our refinery and terminal gates.

Their dedication and efforts that allowed us to strongly finish what started out as a very challenging gear.

Speaker 3: for their dedication and efforts that allowed us to strongly finish what started out as a very challenging year.

For the fourth quarter, we continued building on the positive momentum generated by strong demand for our products.

Speaker 3: Through the fourth quarter, we continued building on the positive momentum generated by strong demand for our products.

Our high complexity refining system benefited from improving proving crude differentials.

Speaker 3: Our high complexity refining system benefited from improving crude differentials as OPEC Plus continued their measured supply increases over the course of 2021. We expect that trend to extend.

As OPEC plus continued their measured supply increases over the course of 2021.

We expect that trying to extend into 2022.

We are seeing strong demand for light crude in certain regions, which is also contributing to favorable differentials.

Speaker 3: We are seeing strong demand for light crude in certain regions, which is also contributing to favorable differentials for lower quality feedstocks. Having said that, crude markets remain tight.

Lower quality feedstocks.

Having said that crude markets remain tight.

And in part this has led to tight product markets.

As we exited 2021 inventories were low across the board the.

Speaker 3: As we exited 2021, inventories were low across the board. Domestic gasoline, diesel, and jet stocks are all currently below 2019 levels and trailing five-year average lows.

Domestic gasoline diesel and jet stocks are all currently below 2019 levels and trailing five year average levels.

Perhaps more importantly from a demand perspective gasoline diesel and jet inventories are all below $2 19 in 2019 levels in terms of days of forward cover.

Speaker 3: Perhaps more importantly, from a demands perspective, gasoline, diesel, and jet inventories are all below 2019 levels in terms of days of forward cover.

We view this as a very constructive set up for 2022 product inventories are low demand continues to strengthen and lower refinery capacity due to global capacity rationalization should also support phase.

Speaker 3: We view this as a very constructive setup for 2022. Product inventories are low. Demand continues to strengthen. And lower refinery capacity due to global capacity rationalization should also support

Favorable refining margins demand remains the key driver we expect demand in 2022 will continue its strong recovery and exceed 2021.

Speaker 3: favorable refining margins. Demand remains the key driver. We expect the band in 2022 will continue its strong recovery and exceed 2021.

With that I will now turn the call over to Matt. Thanks, Tom.

Speaker 3: With that, I will now turn the call over to Matt. Thank you, Tom. As Tom mentioned, we finished the year.

Tom mentioned, we finished the year on a high note and I'm pleased with current market conditions as they are certainly trending in the right direction.

Speaker 4: with the current market conditions, as they are certainly trending in the right direction.

Overall <unk> had a good quarter, we operated well in the east coast, while completing turnaround work on the crude and sulfur units.

Speaker 4: Overall, PBF had a good quarter. We operated well on the east coast while completing turnaround work on the crude and sulfur units.

While we suffered through unplanned downtime in Toledo, the repairs are now complete.

Speaker 4: While we suffered through unplanned downtime in Toledo, the repairs are now complete and we are...

And we are running as planned.

Chalmette ran well in the Gulf Coast.

Speaker 4: The Chalmette ran well on the Gulf Coast, and our west coast assets ran very well, including the completion of turarounds on the Catfeet Hydro Treater and Sulfur plant at Martinez.

Our west coast assets ran very well, including the completion of turnarounds on the cat feed hydro treater and sulphur plant at Martinez.

Looking ahead to the first quarter, our capex and throughput guidance as presented in today's press release.

Speaker 4: Looking ahead to the first quarter, our CAPACs and throughput guidance is presented in today's press release.

First quarter represents approximately 30%.

Speaker 4: The first quarter represents approximately 30%.

Of our turnaround work for the year with ongoing work, primarily on the West Coast and East Coast.

Speaker 4: of our turnaround work for the year, with ongoing work primarily on the West Coast and East Coast.

Over the past year, we've advanced our renewable diesel project in Chalmette.

Speaker 4: Over the past year, we've advanced our renewable diesel project in Chalmette.

We believe we have a top tier project with regards to capital costs.

Speaker 4: We believe we have a top-tier project with regards to capital costs, operating costs.

Operating costs geographic flexibility.

Feed and product Optionality.

Speaker 4: feed-in product optionality and time to market.

And time to market.

To date, we have completed the project engineering and design.

Speaker 4: The day we have completed the project engineering and design.

We work closely with the state of Louisiana, and local officials to earn their support and secure a property tax incentives as.

Speaker 4: We work closely with the state of Louisiana and local officials to earn their support and secure property tax incentives.

As well as all of the all of the necessary permits to begin construction.

Speaker 4: as well as all of the necessary permits to begin construction.

Which began last quarter.

We fully anticipate that we will be in production with full capabilities.

Speaker 4: We fully anticipate that we will be in production with full capabilities in the first half of next year.

In the first half of next year.

The project is designed for 20000 barrels a day of renewable fuels capacity with full pre treatment capability.

Speaker 4: Project is designed for 20,000 barrels a day of renewable fuels capacity with full pre-treatment capability.

We expect.

Our total project cost to come in under $2 per gallon and we believe this compares favorably with projects of similar size.

Speaker 4: Our total project cost to come in under $2 per gallon. And we believe this compares favorably with projects of similar size and scope.

Scope.

We were able to achieve this capital efficiency by leveraging existing idled equipment at the Chalmette refinery.

Speaker 4: We are able to achieve this capital efficiency by leveraging existing idle equipment at the Shell Met refinery, including an idle hydrocracker.

Including an idled hydrocracker.

In addition to the capital cost advantages.

We also expect to have a top tier facility in terms of operating costs.

Speaker 4: You also expect at a top tier facility in terms of operating costs.

The facility will directly benefit from being co located with an operating refinery.

Speaker 4: facility will directly benefit from being co-located with an operating refinery.

Yeah.

Additionally, chalmette is location.

Centrally at the intersection of the Mississippi River and the Gulf of Mexico.

Speaker 4: essentially at the intersection of the Mississippi River and the Gulf of Mexico is ideal with direct access to the grain belt and trade flows on the Mississippi.

As ideal with direct access to the grain belt and trade flows on the Mississippi.

And with full optionality to deliver Rd products to the most attractive markets globally.

Speaker 4: And with full optionality to deliver R.D. products to the most attractive markets globally.

With the combination of operating expense and logistics advantages.

Speaker 4: with the combination of operating expense and logistics advantages.

We believe we will be able to deliver the lowest cost Rd barrels.

Speaker 4: We believe we will be able to deliver the lowest cost RD barrels into all the key demand market.

To all of the key demand markets.

Including Europe .

Speaker 4: including Europe , Canada, and California, where we will be further advantaged by utilizing our existing statewide foot-

Canada, and California were will be further advantaged by utilizing our existing statewide footprint.

In parallel with the project development, we are evaluating a number of different financing alternatives across the capital structure.

Speaker 4: In parallel with the project development, we are evaluating a number of different financing alternatives across the capital structure.

We are working with financial advisors and are encouraged by the interest expressed by potential counterparties.

Speaker 4: We are working with financial advisors and are encouraged by the interest expressed by potential counterparty.

We should be able to provide an update on these activities in the coming months.

Speaker 4: We should be able to provide an update on these activities in the coming months.

Before turning the call over to Eric I must comment on the RFS.

Speaker 4: Before turning the call over to Eric, I must comment on the RFF.

As this is still one of the industry's strongest headwinds there's also driving costs higher at the pump.

Speaker 4: as this is still one of the industry's strongest headwinds there's also driving costs higher to pump

For every consumer in the country.

After months of delay the EPA finally offered their RVO proposal for not only 21 and 'twenty two.

Speaker 4: After months of delay, EPA finally offered their RVO proposal for not only 21 and 22, but also a

But also adjusted 2020.

While the EPA is 'twenty 'twenty and 2021 proposals appropriately reflect actual RIN generation.

Speaker 4: While the EPA is 2020 and 2021 proposals appropriately reflect actual ring generation.

The EPA proposal Unachievable RVO for ethanol Rins in 'twenty two.

Speaker 4: the EPA proposed an unachievable RVO for ethanol rent in 22.

As most markets are the RIN market is forward looking.

Speaker 4: As most markets are, the rent market is forward look.

And as such the increase in 22 creates a shortfall whereby the market will need to rely on the depleting RIN bank.

Speaker 4: and as such the increase in 22 creates a shortfall whereby the market will need to rely on the depleting rim bank and an increased and advanced rim generate.

And then increased advanced RIN generation.

Stated more simply RIN scarcity.

Speaker 4: Dated more simply, Ren scarcity will persist.

<unk> persist.

If the EPA fails to lower the 'twenty two RVO by one 5 billion gallons to be more in line with the EIA demand projections.

Speaker 4: EPA fails to lower the 22 RVO by 1.5 billion gallons to be more in line with EIA demand projection.

The scenario in which the scenario in which the market runs out of Rins that we laid out on previous calls could easily materialize in 'twenty two.

Speaker 4: The scenario in which the market runs out of rents that we laid out on previous calls could easily materialize in 22.

This would create significant problems for the market at large.

Speaker 4: This would create significant problems for the market at large.

The administration has been hearing from a lot of stakeholders on the problems with 22 conventional biofuel requirement.

Speaker 4: Administration has been hearing from a lot of stakeholders on the problems with 22 conventional biofuel adapt, general meeting, requirements in the most rigorous perspective that requires

So we are hopeful there'll be a pathway to a more sensible and workable program with the final rule.

Speaker 4: So we are hopeful there will be a pathway to a more sensible and workable program with the final rule.

There was a lot more news to come in this area and like you we can speculate.

Speaker 4: There's a lot more news to come in this area and like you, we can speculate, but we'll have to wait until the rule is finalized.

But we'll have to wait until the rule is finalized.

Speaker 3: Would that alter it over to Eric? Thank you, Matt. Our positive fourth quarter financial results reflect an improving refining market based on strong product demand as the recovery from the pandemic continues.

That I will turn it over to Eric Thank you Matt.

Our positive fourth quarter financial results reflect an improving refining market based on strong product demand as the recovery from the pandemic continues.

Today, we reported adjusted EBITDA of approximately $425 million. Most importantly, our free cash flow generation continued to improve in the second half of 2021.

Speaker 5: Today, we reported adjusted EBITDA of approximately $425 million. Most importantly, our free cash flow generation continued to improve in the second half of 2021, following our pivot to profitability during the second quarter last year.

Following our pivot to profitability during the second quarter last year.

Our adjusted EBITDA increased two notable non cash income items, we recognized roughly $80 million related to the Q4 cash settlement of our California, AB 32 cap and trade obligations and approximately $75 million for net adjustments to our outstanding rent obligation.

Speaker 5: Our AdjustedEva.inclin's two notable non-cash income items.

Speaker 5: We recognized roughly 80 million related to the Q4 cash settlement of our California AB32 cap and trade obligations and approximately 75 million for net adjustments to our outstanding at the largest budget out there.

Consistent with our prior 2021 quarters, we wanted to provide incremental context around our accrued environmental expenses.

Speaker 5: Consistent with our prior 2021 quarters, we wanted to provide incremental context around our approved environmental expense.

Our overall accrual has decreased since Q3 by approximately $350 million to a balance of approximately $950 million.

Speaker 5: Our overall accrual has decreased since Q3 by approximately 350 million to a balance of approximately 950 million.

Of this roughly $400 million relates to our California obligations that will be settled over the next few years.

Speaker 5: of this roughly 400 million relates to our California obligations. That will be settled over the next few years.

Our accrued RIN obligation at year end was approximately $550 million.

Speaker 5: Our accrued RIN obligation at year end was approximately 550 million.

We continue to carry a mark to market ring, RIN position, which was valued at $450 million at year end with the remaining $100 million being fixed price purchase commitments that.

Speaker 5: We continue to carry a market market ring, ring position, which was valued at 450 million at year end, with the remaining 100 million being fixed price purchase commitment.

That we expect to be satisfied during the first quarter of this year.

Speaker 5: that we expect to be satisfied during the first quarter of this year.

Consolidated Capex for the quarter was approximately $169 million.

Speaker 5: Consolidated CapEx for the quarter was approximately 169 million, which includes 167 million for refining in corporate CapEx, and 2 million for PBF logists.

Which includes 167 million for refining and corporate Capex and $2 million for PBF logistics.

For the full year 2021, our consolidated capital expenditures totaled just under $400 million.

Speaker 5: For the full year 2021, our consolidated capital expenditures totaled just under 400 million.

While our planned refining capital expenditures in 2022, our increased over 2021, we continue to focus on capital discipline.

Speaker 5: While our planned refining capital expenditures in 2022 are increased over 2021, we continue to focus on capital distance.

Our historical annual maintenance environmental regulatory and safety capital expenditures have been consistently in the $150 million to $200 million range and we expect this to continue in 2022.

Speaker 5: our historical annual maintenance, environmental, regulatory, and safety capital expenditures have been consistently in the $150 to $200 million range. And we expect this to continue in 2020.

Consistent with our approach during the pandemic. We believe it is prudent planning to address near term turnaround requirements, we expect to incur turnaround related capital expenditures of approximately $200 million to $225 million in the first half of this year.

Speaker 5: consistent with our approach during the pandemic. We believe it is prudent planning to address near term turnaround required.

Speaker 5: We expect to incur turnaround related capital expenditures of approximately 200 to 225 million in the first half of this.

Our liquidity position remains consistent with more than $2 4 billion of total liquidity, including approximately $1 3 billion of cash and in excess of $1 1 billion of borrowing availability at the end of the quarter.

Speaker 5: Our liquidity position remains consistent with more than 2.4 billion of total liquidity, including approximately 1.3 billion of cash, and in excess of 1.1 billion of borrowing availability at the end of the court.

Throughout the pandemic by necessity, we maintained the level of liquidity and cash on hand beyond our day to day operational needs as business conditions improve we expect to return to previous operating levels of liquidity.

Speaker 5: Throughout the pandemic, by necessity, we maintain the level of liquidity and cash on hand beyond our day-to-day operational needs.

Speaker 5: as business conditions improve. We expect to return to previous operating levels of liquidity.

As we discussed during our third quarter call. The deleveraging process is underway.

Speaker 5: As we discuss during our third quarter call, the de-leveraging process is underway.

Our efforts in 2021 resulted in debt reduction of more than $335 million.

Speaker 5: Our efforts in 2021 resulted in debt reduction of more than 335 million.

As mobility statistics continue to strengthen demand for our core products will result in continued profitability that should translate into an organic form of lower net leverage at PBF.

Speaker 5: As mobility statistics continue to strengthen, demand for our core products will result in continued profitability that should translate into an organic form of lower net leverage at PCF.

In addition, one of our near term priorities is to amend and extend the bank facilities at PBF Holdings, and PBF logistics and to address the 2023 unsecured note maturity at PBF logistics.

Speaker 5: In addition, one of our near-term priorities is to amend and extend the bank facilities at PVF holding and PVF logistics and to address the 2023 unsecured note maturity at PVF logistics.

Similar to the successful refinancing and extension of our multi year inventory intermediation facility. Our goal will be to find the most attractive balance between cost of capital flexibility of structure and tenor.

Speaker 5: Similar to the successful refinancing and extension of our multi-year inventory intermediation facility, our goal will be to find the most attractive balance between cost of capital, flexibility of structure, and tenor.

Successful execution of this step lays the groundwork for a longer term deleveraging and addressing our 2025 debt maturities.

Speaker 5: Successful execution of this step lays the groundwork for longer term the leveraging and addressing our 2025 debt maturity.

Our goal our goals are achievable in this market. If we continue to focus on operating safely and reliably controlling costs.

Speaker 5: Our goals are achievable in this market. If we continue to focus on operating safely and reliably, controlling costs, and...

And generating cash.

Operator, we've completed our opening remarks, and we'd be pleased to take any questions.

Speaker 5: Operator we've completed our opening remarks and we'd be pleased to take any questions Thank you

Thank you.

In a moment, we will open the call for questions.

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One moment, please why do we poll for questions.

Okay.

First question is from the line of Phil Gresh with J P. Morgan. Please go ahead.

Speaker 1: The first question is from a line of Phil Grash with JP Morgan. Please go ahead.

Hey, good morning, Eric.

Speaker 2: Hey, good morning Eric with respect to your comment in terms of the quarter just to make sure I fully understand the moving pieces

With respect to your comments in terms of the quarter just to make sure.

I fully understand the moving pieces.

Talked about the mark to market effects with the Navy 32 was there also any impact with respect to.

The changing of the RV OS and the quarter end.

Speaker 2: changing of the RBOs in the quarter and some of the other refiners kind of had some catch-up effects with respect.

Some of the other refiners kind of had some catch up effects with respect to that yes.

These that that is the roughly the $75 billion mark to market write RIN prices didn't move materially quarter over quarter.

Speaker 5: Yeah, that is roughly the $75 million mark to market, right? RIN prices didn't move materially, quarter over quarter. So the $75 million relates to, let's call it the standard change that came out in Q4.

So the $75 million relates to let's call. It the standard change that came out in Q4.

So another way to say it is the 425 of adjusted EBITDA included roughly $155 million worth of income related items non cash income related items, there the 80 plus 75.

Speaker 5: So another way to say it is the 425 of adjusted EBITDA included roughly $155 million worth of income-related items, right non-cash income-related items there, the 80 plus the 75.

Okay that makes that makes sense that's perfect. Thank you.

Speaker 2: Okay, that makes sense. That's perfect. Thank you. And then just overall, as you look at 2022, I know you mentioned the turnaround spending in the first half, but how do you think about overall spending for 2022 and with the comments Matt was making on Shell Matt, I guess it's officially moving forward and will there be, you know, some one-time spending this year for that project, just any additional thoughts you could share there.

And then just overall as you look at 2022 I know you mentioned the turnaround spending in the first half, but how do you think about overall spending for 2022 and with the comments, Matt was making on Chalmette I guess is it officially moving forward and will there be.

Some one time spending this year for that project just any additional thoughts you could share there.

Sure so of the $400 million that we spent throughout the course of 2021, there is around $45 million of cash that was invested in the renewable diesel project right, It's primarily engineering Ah <unk>.

Speaker 5: Sure. So of the $400 million that we spent throughout the course of 2021, there is around $45 million of cash that was invested in the renewable diesel project, right? It's primarily engineering, handful of other commitments that were made during the year.

Full of other commitments that were made during the year.

Fortunately the bulk of the spend on the renewable diesel project is going to be back end weighted right. So what we have today is we have advanced the project, Matt mentioned tax incentives that we've received the project is fully permitted and at this point using financial advisors. We believe that we will be in a position to fully fund the.

Speaker 5: Fortunately, the bulk of the spend on the reduable diesel project is going to be back in weighted, right? So what we have today is we have advanced the project that mentioned tax incentives that we've received. The project is fully permitted and at this point, using financial advisors, we believe that we will be in a position to fully fund the project throughout the course of this year.

Throughout the course of this year.

I think at this point right, we're talking about an extremely competitive project top quartile project with respect to cost and so from our standpoint, we believe there will be incremental outside capital that will come in and essentially help us as we continue to incubate This project internally.

Speaker 5: Again, I think at this point, right, we're talking about an extremely competitive project, top quartile project with respect to cost. And so from our standpoint, we believe there will be incremental outside capital that will come in and essentially help us as we continue to incubate this project in terms.

So just I guess just on the cost below $2 per gallon cost for the project is that a net cost inclusive of the tax credits and other things that you would expect or just how do you think about the net cost to PBF. If there is no partner and.

Speaker 2: So just, I guess, just done the cost that below $2 per gallon cost.

Speaker 2: is that a net cost? Inclusive of the tax credits and other things that you would expect or just how do you think about the net cost to PBF if there is no partner? And I guess you're saying.

I guess youre, saying you move forward, even if you didn't have a partner and I'll turn it over thank you.

Just in regards to the net cost is we expect all the capital required to manufacture.

Speaker 4: just in regards to the next boss, if we expect all the capital required.

Speaker 4: manufacturer, $20,000 a day of renewable diesel with full free treatment capability to come on their $2 a barrel. I mean, $2 a gallon, excuse me. The property tax incentive, that helps in regards to our operating expenses once we're operating because that's ongoing forgiveness with the state of Louisiana. But it's.

20000 barrels a day of renewable diesel with full pretreatment capability to come under $2 a barrel.

I have two.

$2 a gallon excuse me.

The property tax incentive that helps in regards to our operating expenses once we're operating.

That's that's all ongoing forgiveness from with the state of Louisiana.

But it did.

To address your question head on as we can.

Speaker 4: address your question as head on as we can. The $2 encompasses all capital required to be fully into business.

$2 encompasses all capital required to be fully in the business.

So Phil this is a this is a 600 million dollar project all in for which PBF, let's just round up let's say that $45 $50 million, we've invested $50 million to date through the course of 2021 over the next six quarters. The plan would be to continue to invest the remaining $550 million. We've received all of our perm.

Speaker 5: So Phil, this is a $600 million project all in for which PBF, let's just round up, let's say that $45 is $50 million. We've invested $50 million to date through the course of 2021. Over the next six quarters, the plan would be to continue to invest the remaining $550 million. We've received all of our permits. The project is significantly de-risk. We will at PBF continue to incubate the project.

The project is significantly de risked we will at PBF continued to incubate. The project. We have received countless inbounds, we believe with some assistance, helping administer basically a capital raising project over the next six months, we will be in a position to fully fund the project through the remainder of two.

Speaker 5: We have received countless in-bounds. We believe with some assistance helping administer basically a capital raising project.

Speaker 5: Over the next six months, we will be in a position to fully fund the project through the remainder of 2023 and start producing renewable diesel midway through fiscal year two.

<unk> thousand 23, and start producing renewable diesel midway through fiscal year 2023.

Got it thank you.

Thank you Graham next question from the lineup Roger read with Wells Fargo. Please go ahead.

Speaker 1: Thank you. We have an expression from the lineup, rather really with Wells Fargo, please go ahead. Yeah, thank you. Good morning.

Yes. Thank you good morning.

Okay.

I guess could we do two things one a little more detail on the turnarounds that you're encountering kind of what you see maybe even broader across the industry and then hit.

Speaker 6: Um, I guess can we do two things? One, a little more detail on the turnarounds that you're encountering, kind of what you see.

Speaker 6: maybe even broader across the industry and then hit also how you're seeing the demand side. Obviously you talked about it improving. There was a story that you're going to bring some of the units from Paul's borough back online as a function of say a story. You put the press release out but you were seeing better demand on the East Coast and better supply demand situation. So I was just curious how all that was fitting together here.

Also how youre seeing the demand side, obviously, you talked about it improving are there was a story they youre going to you know.

Bringing some of the units from Paul's borrow back online as a function of SaaS story you. Yeah, you you put out press releases, but.

What you were seeing better demand on the east coast and better supply demand situations. So I was just curious how all that was putting together here.

Speaker 4: Paul, our, you know, Roger, excuse me. Ed, let me address the last question and then all handed over to Tom and regards to Paul's, but we actually didn't put out a press release. There were some press reports. What my comment would be, the press reports weren't entirely accurate. We're continuously looking to optimize our system not only on the East Coast, where we have two refinements, but across our system.

Paul.

Roger excuse me.

Let me address the last question and then I'll hand, it over to Tom in regards to pause or we actually didn't put out a press release that there were some press reports.

What my comment would be.

<unk> reports weren't entirely accurate.

So you're looking to optimize our system not only on the east coast, where we have two refineries, but across our system.

We do that every single day in that effort. There are some things we are planning to do on east coast with some secondary units.

Speaker 4: We do that every single day in that effort. There are some things we are playing to do on East Coast with some secondary units.

Speaker 4: that will improve our clean product yield and reduce logistics costs between our two plans.

That will improve our clean product yield they'll reduce logistics costs between our two plants, but none of the headlines have changed in regards to we're not starting up a cat cracker.

Speaker 4: But none of the headlines have changed in regards to, we're not starting up a crack cracker, or the coaker, there's no major catbacks, or no major throughput changes. So some press reports were a bit erroneous, but we're always optimizing our system, indeed. We are continuously doing that on these coasts as well. So we will be starting up some secondary units, specifically in close growth.

The coker.

There is no major capex or no major throughput changes. So some press reports, where we're a bit erroneous, but we're always optimizing our system and indeed, we are continuously doing that on the east coast as well. So we will be starting up some secondary units specifically in sales growth.

And I'll just add on that it's Tom good morning, Roger.

Speaker 3: Yeah, and I'll just head on that those time. Good morning, Pradur.

Quantity issue is equally configuration worked it really did work, but as we started to see demand recovery and bring up our utilization, particularly in Delaware to take advantage of market opportunities. We found ourselves getting constipated, if you will and Delaware because of the intermediates.

Speaker 3: What had the issue is that each code configuration worked. It really did work.

Speaker 3: But as we started to see demand recovery and bring up our utilization particularly in Delaware,

Speaker 3: to take advantage of the market opportunities. We found ourselves getting constipated, if you will, in Delaware because of the intimeasement transferred from Polesboro.

<unk> transferred from Paul's barrel, two Delaware, when we shut down our cat cracker at a coker et cetera.

Speaker 3: two dollar way when we shut down the cat cracker, the coca, et cetera. So what we're really doing now is we're starting up a couple of units. Not the big ones as Matt said. That is basically getting reduced those transfers significantly. Bullsboro will turn them into finished products.

So what we're really doing now is we're starting up a couple of them.

And it's not the big ones as Matt said, and it's basically a go get it.

<unk> reduced our transfer of significantly plausible will turn them into finished products not a significant increase in clean product production, but some high value products production and a better capture rate regarding turnarounds I think some of our.

Speaker 3: not a significant increase in clean product production, but some high value products production and a better capture rate. We got turn around. I think some of our on prior calls, our peers have indicated that, you know, everybody hunkered down, as best you could during the pandemic, and certainly we did.

On prior calls our peers have indicated that.

Everybody hunkered down as best you could darn.

The pandemic and certainly we did.

Speaker 3: And as Eric reinforced, you know, we would not.

And we and as Eric reinforced.

Would not.

Cut routine maintenance or jeopardize the operations integrity of the units, but we did take steps.

Speaker 3: cut routine maintenance or jeopardize the operations integrity of the units, but we did take steps.

It takes smaller turnaround squads do things of that nature.

Speaker 3: like take small turn around, squads, do things of that nature.

Speaker 3: And now we're going to go and start to return to more of a normal run rent cycle. And for us specifically, most of this is in the first half of the year. We have already done one in Martinez. We'll be taking a turnaround in time in the second quarter. Delaware City will be taking a turnaround on their reformer. And as and shall met is actually in the process of wrapping up a turnaround in end.

And now we're going to go and start to return to a more of a normal run rent cycle and for us specifically.

Most of this is in the first half of the year, we have already done one and Martinez will be taking.

Turnaround in Torrance, and the second quarter, our Delaware City will be taking a turnaround on their on a reformer.

And and Chalmette is actually in the process of wrapping up.

A turnaround.

<unk>.

On their aromatics and reforming units. So we've seen an increase we were going to back to kind of a normal type of run pattern and I think that's happening throughout the industry.

Speaker 3: on their aromatics and reforming units. So we've seen an increase that was going back to kind of a normal type of a run pattern. And I think that's happening throughout the...

And if you look at what the.

Speaker 3: And if you look at what the Rexxers saying in terms of what the schedule turn around are, they are quite high and That coupled with some of the unscheduled down times and the rationalization that I mentioned

Rags is saying in terms of what the scheduled turnarounds are they are quite high.

And that coupled with some of the unscheduled downtime and the rationalization that I mentioned.

Certainly seems to lay the groundwork for pretty high utilizations in the industry in the U S N and frankly other parts of the world.

Speaker 3: Certainly seems to lay to groundwork for pretty high utilization in the industry in the US and frankly other parts of the world.

I appreciate the clarification, thanks, guys good quarter.

Speaker 6: Appreciate the clarification. Thanks guys, good quarter. Thank you, everybody.

Thank you Roger.

Thank you we have next question from the line of Doug Leggate with Bank of America. Please go ahead.

Speaker 1: Thank you. We have an next question from the line of Duck Legged with Bank of America, please call.

Yeah.

So good morning, everyone on appreciate the clarity on on that.

Speaker 7: Thank you, second morning everyone. And I appreciate the clarity on the unit restart that was actually one of the things that I remained as well. Erica, I wonder if I could kick off with ring costs. You obviously walked us through what the EBITDA empire was. I just wonder if you could quantify to the extent you can.

We start that was actually one of the things on our mind as well.

Eric I Wonder if I could kick off with RIN costs, you, obviously walked us through what the EBITDA impact as well.

Wonder if you could.

Quantify to the extent you can what the cost.

Avoidance was the cash cost avoidance in the quarter were trying to get a handle on what the underlying cash cover the businesses. If you hadn't fully funded your current RIN cash cost obligation.

Speaker 7: avoidance was the cash cost of voidance in the quarter. We're trying to get our handle on what the underlying cash power of the business is if you had fully funded your current rent, rent, cash cost obligation.

Well, we have a net rent expense.

Roughly incurred every months of about $50 million Rins right. We've outlined our gross RVO in a regular way throughput environment, a roughly 900 million rins. So that equates to we blend roughly a third we have a net obligation that hits the P&L of $600 million rents so assume on average and it will obviously depend.

Speaker 5: roughly incurred every month of about 50 million Rins, right? We've outlined our gross RVO in a regular way throughput environment of roughly 900 million Rins. So that equates to, we blend roughly a third. We have a net obligation that hits the PNL of 600 million Rins. So assume on average, and it will obviously depend on, turn around some other things. We incur 50 million Rins per month of an obligation.

On turnarounds or other things, we have if we incur 50 million rins per month of an obligation.

I think we were relatively straightforward in our third quarter call and even going back to the end of the summer that we were continuing to carry a short related to 2021.

Speaker 5: I think we were relatively straightforward in our third quarter call and even going back to the end of the summer that we were continuing to carry a short related to 2021.

We have essentially right, we invested $185 million.

Speaker 5: We have essentially, right, we invested $185 million.

Past quarter to fulfill all of the firm fixed price commitments for our RIN position. We're now looking at this <unk> position as a 2000 22021 overall consolidated written position.

Speaker 5: Fast Quarter to fulfill all of the firm fixed price commitments for our RIN position. We are now looking at this RIN position as a 2020-2021 overall consolidated RIN position. I think what I would say is to put it in context.

What I would say is to put it in context.

Had we been purchasing rins on a ratable basis throughout the course of 2021, we would have had over $800 million of rent expense.

Speaker 5: Had we been purchasing rents on a rateable basis throughout the course of 2021, we would have had over 800 million dollars of rent.

Our P&L year to date is $725 million, hence the $75 million.

Speaker 5: Our P&L year-to-date is $725 million, hence the $75 million of adjustment that was flushed through the P&L so recognized as income.

Adjustments that was flushed through the P&L so recognized as income.

The key pieces that an $800 million rent expense.

Speaker 5: The key piece is that an $800 million Rhinocspence.

Speaker 5: is more than 35% above what we pay, just shy of 4,000 employees every.

More than 35% above what we pay just shy of 4000 employees every year.

That's really the key message I think it works if we're trying to figure out what's the cash.

Speaker 5: That's really the key message. I think if we're trying to figure out what's the cash.

That this business can generate our refining business generated over $200 million of EBITDA during the quarter regular way.

Speaker 5: that this business can generate, our refining business generated over $200 million of EBITDA during the quarter, regular way.

Once we adjust for that.

Speaker 5: these market to markets and AB 32 and P.B.F. logistics generated 60 million of EBITDA. That's what that's the core earnings power of the business in the fourth quarter, really driven by West Coast and Gulf Coast. We probably...

These mark to markets and a <unk> 32, and PBF logistics generated 60 million of EBITDA. That's what that's the core earnings power of the business in the fourth quarter really driven by West Coast and Gulf Coast.

But we probably I probably left.

Go ahead Doug.

Speaker 7: Go ahead, Doug. One. No, I was just gonna say that I understand that, but I'm trying to, what we're trying to figure out is...

No I was just going to say I understood understand that but I'm trying to what we're trying to figure out is.

If you are unable to.

Speaker 7: If you are unable to somehow get relief for the rent obligation, your cash flow would have been lower. I'm trying to understand how much lower. And I guess as a related follow-up of the 950 million that you have.

Somehow.

Get relief for the RIN obligation.

Your cash flow would have been lower I'm trying to understand how much lower and.

And I guess as a related follow up of the $950 million that you have.

Cumulatively accrued at the end of the year.

Speaker 7: I guess, cumulatha we accrue to the end of the year. What do you expect the cash cadence of that to be in terms of cash outflow? I would completely concur with the stupidity of the RFS on accompanying it like yourselves, but nevertheless we got to acknowledge that as a potential obligation, we're trying to understand what it would look like if you met that obligation on a current cost basis.

What do you expect the cash cadence of that to be in terms of cash outflow.

I completely concur with the you know the.

The stupidity of the E. R. S S. When a company like yourselves, but nevertheless, we got to acknowledge that as a potential obligation. We're trying to understand what it would look like if you met the obligations on a current cost basis.

Today right. We are we have we exited in 2021.

Speaker 5: So today, right, we have we exited 2021 for RIN-related liabilities $550 million. A hundred of that is fixed.

For RIN related liabilities of $550 million 100 of that is fixed 450 million relates to our rent short position so number of brands.

Speaker 5: 450 million relates to our RIN short position. So number of RINs.

Times, the weighted average RIN cost as of the last business day of 2021.

Speaker 5: times the weighted average rent cost as of the last business day of 2021. So if that...

So if that price didnt change.

And we were required to fulfill that obligation we would be on the hook for $450 million, that's the floating rate exposure.

Speaker 5: And we were required to fulfill that obligation. We would be on the hook for $450 million. That's the floating rate exposure.

Alright.

Okay.

Speaker 4: Okay, I'll give you a look. Hey Doug, hey on the media. Just so we're clear though, I just want to make sure you understand. Whether we're procuring the rents in the market or not, we're fully expensing.

Hey, Doug Hey.

Doug just so we're clear, though I just want to make sure you understand.

Whether we're procuring the rents in the market or not we're fully expensing.

Wins throughout the quarter for whatever the prevailing RIN price is right.

Speaker 4: Wrens throughout the quarter for whatever the prevailing wind price is.

Alright.

Yes, no I understand and I appreciate the clarification guys. Hopefully my my second question is a bit more constructive.

Speaker 7: Yeah, no, I understand that. And I appreciate the clarification, guys. Hopefully my second question is a bit more constructive. It's a bit of a micro question, but what we're trying to quantify is whether international gas, Europe in particular, becomes...

It's a bit of a kind of a micro question, but what we're trying to quantify is whether international gas euro.

Europe in particular becomes a structural.

Situation going forward, maybe not at current levels.

Speaker 7: situation going forward, maybe not at current levels. I just wonder if you could help kind of quantify how you might think about the relative.

I just wonder if you could help kind of quantify how you might think about the relative.

Margin uplift for the for your system versus let's say the generic European system.

Speaker 7: margin uplift for your system versus, like say, the generic European system as a consequence of significantly higher gas prices, both for energy and obviously hydro-treating. I don't think you can quantify that on a per-bottle basis. It's two bucks, it's a three bucks. How would you frame that rep?

Consequent salts significantly higher gas prices, both for the energy and obviously hydro treating.

If you can quantify that on a per barrel basis at two bucks three bucks, what how would you how would you frame that reference.

We've looked at it and obviously, it's going to be a function of the absolutely spreads.

Speaker 3: We've looked at it and obviously it's going to be a function of the absolute spreads. You know, when I...

When it when.

Speaker 3: gas prices in Europe that will even out it and it's there at $25 a million. That's over $150 equivalent to oil.

Gas prices in Europe that will even out.

If there are $25 1 million.

Over $150 equivalent oil.

Can you just add versus.

Speaker 3: Do you use that versus the prices we're paying in the US? That probably results or translates

The prices, we're paying in the U S that probably results or translates to.

The following advantages, it's gonna change on individual refinery configurations et cetera.

Speaker 3: the following advantages, you know, it's going to change on individual refinery configurations, et cetera, and it'll change based on whether or not some of the refineries in Europe have the capability to switch to oil.

It'll change based on whether or not some of the refineries in Europe have the capability to switch to oil and therefore, maybe be able to blunt some of their gas exposure, but if you can't do that and basically.

Speaker 3: and therefore they may be able to blunt some of their gas exposure. But if you can't do that, and basically with these spreads, you're probably looking at a three to five dollar barrel operating cost an audio advantage for US or at least our system given the size and the complexity and the cost that we incur. And then you hit clearly on the second point, which is a very significant, well, it's three points you make.

With each spreads you're probably looking at a three to $5 a barrel operating cost and our view advantage for us or at least our system given the size and the complexity.

And the cost that we incur and then you had clearly on the second point, which is a very significant while there's three points you made.

The third is the operating cost because we obviously by natural gas to fire up the engine inside a refinery.

Speaker 3: the operating course because we obviously buy natural gas to fire up the engine inside of the refinery.

But then we we buy either natural gas and process. It in our own plants or by third party hydrogen that is made from natural gas in order to hydro treat hydrocracking do all those other things and there is significant.

Speaker 3: But then we buy either natural gas and process it in our own plants or buy third-party hydrogen that is made from natural gas in order to hydratrate and hydracrack and do all those other things.

Speaker 3: and there's a significant obviously increasing course of hydrogen production with these prices.

Obviously, increasing cost of hydrogen production with these prices, which would be an advantage for our system U S system versus Europe or any other place that faced with these costs.

Speaker 3: which would be an advantage for our system u.s. system versus Europe or any other place that step uh... faced with these costs and what was seen on that though is

What we're seeing on that though is obviously if the cost of hydrogen goes up precipitously.

Speaker 3: Obviously, if the cost of hydrogen goes up precipitously.

It gives you a rather significant economic advantage to switch crude slates change your crude slate back out the highest sulfur crudes.

Speaker 3: It gives you a rather significant economic advantage to switch cruise lights.

Speaker 3: change your cruise lights back out to the highest sulfur cruise and go to sweet accrued and that basically just adds a little bit more fuel to the widening of the light heavies or sweet sows. The first question or the first comment you made I think is just spot on. Is this going to be...

And go to sweeter crudes and that basically just adds a little bit more fuel to the widening.

<unk>. The first question or the first comment you made I think is spot on.

Is this going to be.

Our apartment structural thing I don't know for sure but.

Speaker 3: you know, a parmin structural thing. I don't know for sure, but...

And my own personal view is this is kind of maybe the first or a second example of <unk>.

Speaker 3: And my own personal view is this is kind of maybe the first or second example of

Going into an energy transition with a goal set of goals.

Speaker 3: going into an energy transition with a goal, set of goals, but perhaps not a well-followed out strategy and execution plan. And that's the fact. You shut down the nuclear plants, you shut down the coal plants, and now you're starting to shut down the fossil fuel plants to rely on solar and wind, and if that's not available, well, it becomes a problem. And my own view is we're gonna see more examples of how as we go forward. you

But perhaps not a well thought out strategy and execution plan and ask the fact, you shutdown of nuclear plants, you shut down a coal plant and youre not youre starting to shut down the fossil fuel plants to rely on solar and wind and if that's not available.

It becomes a problem in my own view is we're going to see more examples of that as we go forward.

I appreciate the answers fellas. Thanks, so much.

Thank you.

We have next question from the line of terrorists are Chen from Barclays. Please go ahead.

Speaker 1: We have an express train from the line of Teresa Chen from Barclays. Please go ahead.

Good morning, and I'd love to understand your.

Speaker 8: Morning, I'd love to understand your strategic thoughts around the competitive advantages of the Schommett facility. Matt, understand that you will have full pre-treatment capability and I guess, my question is, is the idea to run on 100% low-ci feet socks or on a run-rate basis DC is between low-ci and high-ci and if the former or if even if the book is low-ci.

Dziedzic thoughts around the competitive advantages of the Chalmette facility and not understand that you will have full pretreatment capability and I guess my question is is the idea to run on 100% a low ci feedstocks or on a run rate basis do you see it split between low Ci and Hiseq and.

If the former whereas even if the book is low Ci just given the tightness in the market and the trouble that even experienced players has in capturing strong margins.

Speaker 8: given the tightness in the market and the trouble that even experienced players have in capturing strong margins.

Given the feedstock constraints and how do you plan to compete in that space.

Speaker 8: given the speech.constrings. How do you plan to compete in that space?

So what we plan to run are the most economic grades available in the marketplace and is a facility that has advantages in regards to the capital that was required to enter the business of the capital that's required to operate the business and the geographic footprint. We have we believe we will be the most one of the most.

Speaker 4: So what we plan to run are the most economic grades available in the marketplace and as a facility that has advantages in regards to the capital that was required to enter the business, the capital that's required to operate the business and the geographic footprint we have, we believe will be the most one of the most competitive vids.

Competitive bids for all feeds.

Speaker 4: for all feeds. But in regards to do we plan to run all C.I. advantage feeds or less advantage feeds?

But in regards to do we plan to run a ci advantaged feeds or less advantaged feeds will have full flexibility and optionality to run what's most economic to run it in a given market.

Speaker 4: We'll have full flexibility and optionality to run what's most economic to run at any given market.

We have the capability to to acquire standup a commercial organization around the AG piece. We're in the process of doing that is critically important to get into that business and understand it.

Speaker 4: We have the capability to You know stand up a commercial organization around ag fees We're in the process of doing that. It's critically important to get into that business and understand it Early so we're in the process of doing that we are full We are full fate that will be able to participate in that market as efficiently as everyone else in the marketplace

It's early so we're in the process of doing that we are full.

I have full faith that we will be able to participate in that market as efficiently as everyone else in the marketplace.

And again, it's no different than the refining business you don't know exactly when the sweet crudes are going to be more attractive or the heavy crudes with the sour crudes.

Speaker 4: And again, it's no different than the refining business. You don't know exactly when the sweet crudes are going to be more attractive or the heavy crudes or the sour crudes. So what's really important is making sure you have the optionality to run whatever you want and that you're in a location that's going to be advantageous.

So what's really important is making sure you have the optionality to to run whatever you want and that Youre in a location that's going to be advantageous.

Got it.

Speaker 9: Got it. I think also that. I think that in terms of, I think you got to look at the marketplace, perhaps a little bit differently going forward. Renewable Dezos is a superior product to bioseason. And there will be transfers of Deeds that are going into that market today that will be falling for into the better margin environment that are going into.

Okay.

In terms of I think you've got to look at the marketplace, perhaps a little bit differently going forward renewable diesel is a superior product to biodiesel and there will be transfer some fees that are going into that market today.

Calling for into the better margin environment are going et cetera.

Thank you and Eric was there any yet and I think to call out on the moving pieces with working capital this quarter.

Speaker 8: Thank you. And Eric, was there any thing to call out on the moving pieces with the working capital this quarter?

Speaker 5: i think yes uh... we did you know we tried to highlight for folks that we were gonna have four hundred thirty five million of cash going out the door right so that's clearly it working working capital related to

I think yes, we did we tried to highlight for folks that we were going to have $435 million of cash going out the door right. So that's clearly hit works I think working capital related to.

This accrued liability were accrued expense line at the same time, we were able to offset that by hitting some year end inventory targets, that's probably worth between 202 hundred $25 million and then there's an incremental 150 ish million dollars that ultimately we benefited from again. This is just continuing to focus on managing the <unk>.

Speaker 5: this accrued viability or accrued expense line. At the same time, we were able to offset that by hitting some year-end inventory targets, that's probably worth between $225 million. And then there's an incremental $150 million that ultimately we benefited from. Again, this is just continuing to focus on managing the balance sheet at this point. So when we think through, you know,

Alex sheet at this point, so when we think through.

Sources and uses of cash through the quarter specific to the refining business, we had about $785 million of stuff that left the system.

Speaker 5: sources and uses of cash through the quarter, specific to the refining business. We had about $785 million of stuff that left the system.

And that was offset by a combination of clearly EBITDA.

Speaker 5: And that was offset by a combination of clearly evita.

This inventory as well as other working capital and your net cash went down by about $135 million Q3 to Q4.

Speaker 5: inventory as well as the other working capital and your net cash went down by about $135 million Q3 to Q4.

Thank you.

Thank you.

Speaker 1: Thank you. We have an expression from the line of Manav Gupta with credit.

Next question is from the line of Manav Gupta with.

With credit Suisse. Please go ahead.

Hum.

Speaker 10: I have a first policy question and I know these are little tricky but I'm hoping you have more visibility than we do. So going back in August there was somewhat of a leak from EPA to Reuters which put our view at 14.1 billion gallons for 2022. Then something changed somewhere when November the final number came out we went right back up to 15 billion gallons.

Policy question and I know these are little tricky, but I'm, hoping you have more visibility than we do.

So going back in August there was somewhat of a leak from EPA to write to us at least put a odd view at 14.1 billion gallons for 2022, that's something changed some of them in November . The final number came out we went right back up to 15 billion gallons now what we are hearing.

Speaker 10: Now what we are hearing is that EPA is again recognizing that 15 billion gallons is not possible. So they are looking to again retroactively cut the 15 billion obligation back to a certain number. Obviously the first question I had was like, what do you think happens here? Do they again go back somewhere around October and November say, okay, 15 was never possible. So let's lower it back to some 14 number or whatever. And then the question then to Eric would be that.

Is that EPA is again, recognizing that 15 billion gallons is not possible.

They are looking to again retroactively cut the 14th the 15 million obligation back to listen, but nonetheless. So obviously the first question I had was like Oh, what do you think happens here do they again go back somewhere around October and November to say, Okay, 15 wasn't ever possible and so less loaded back to some 14 number to what they want and then the question.

Then to Eric would be that like you have some nice to 75 million out of your benefits in your fourth quarter.

Speaker 10: Like you recognize the 75 million RVO benefit in your fourth quarter, like would this become a kind of a recurring item then where you start with a 15 billion gallon number every year with EPA somewhere down the line they make a correction. And so most refiners end up with a fourth quarter number, which is an adjustment because RVO was lowered retroactively somewhere down the year.

Could this become a thing that's what regarding item, then where you'll start with a 15 billion gallon number ever you had with Upa somewhere down the line they make a connection and so most refiners end up with a fourth quarter number but it doesn't adjustment because our view was lowered retroactively somewhere down the year.

Oh I'll start.

Speaker 4: I'll start in regards to the reports.

In regards to the.

Luke.

Ports.

And what ended up happening I mean, I think you can sort of lay is paid at the politicians look this program has been batted around.

Speaker 4: and what ended up happening, I mean, I think you can sort of lay it at the feet of the politicians. Look, this program's been bad and around. And to some degree, I think they got unintended results. I don't think it was the administration's...

To some degree I think they got unintended results I don't think it was the administrations our intention to put out a program that was actually going to increase RIN prices are they tried to make adjustments to previous years without realizing that they tinker with 22 that would have.

Speaker 4: intention to put out a program that was actually going to increase rent prices. They tried to make adjustments to previous years without realizing that they tinker 22 that would have the consequences it did. I think they recognize that now. I think we've been very vocal to tell them directly and our counterparts with the Reptile Workforce, the Building and Trades, all the affected parties in this regard have been speaking to them. I think they certainly understand it. So what they end up doing, we will see. But I think they've certainly recognized it there.

The consequences. It did I think they recognize that now I think we've been very vocal to tell them directly and our counterparts are with the represented workforce building and trades all the affected parties on this oh in this regard as I've been speaking to them and I think they certainly understand.

Band It so what they ended up doing though we will see but I think they certainly recognize it there.

They did not get their desired outcome and obviously, there's should be huge pressure on them.

Speaker 4: they did not get their desired outcome. And obviously, there should be huge pressure on them to adjust the price of gasoline for everyone. And I would thank.

To adjust to the price of gasoline for everyone and I would think.

Hello, maybe not over the last 15 years I would think it would be much easier to do.

Speaker 4: Maybe not in the last 15 years, I would think it would be much easier to do adjusting our vios than negotiating with Iran, but you know, we shall see. And if prices do get, if the problem gets fixed, Rins become less scarce, prices will come down. It's good for the consumers and it's good for the losers on the side of the Rind War that's persisted over the last 15 years.

<unk> been negotiating with Iran, but.

We shall see.

The prices do get of the problem gets fixed rents become less scares prices will come down is good for the consumers and is good for the losers on the side of the reservoir that has persisted over the last 15 years.

And and at this point Manav I think consistent with what we've done previously right. If we go back to 2020 in 2021 and every year prior to that we.

Speaker 5: And at this point, Manav, I think, consistent with what we've done previously, right? If we go back to 2020 and 2021 and every year prior to that, we fully accrue for whatever the most recent kind of public data is available to us. So we've clearly adjusted.

We fully accrue for whatever the most recent kind of public data is available to us. So we've clearly adjusted.

And it hit in Q4 of 2021, we adjusted for the historical retroactive reductions.

Speaker 5: and it hit in Q4 of 2021, we adjusted for the historical retroactive reductions as we look into 2022. If nothing changes between now and the end of Q1, we will be accruing to the overall rent percentages as they are laid out in the most recent pronouncement. If they subsequent

As we look into 2022.

If nothing changes between now and the end of Q1, we will be accruing to the overall rent percentages as they are laid out in the most recent pronouncement.

If they subsequent to Q1.

Our suddenly reduced for whatever reason or changed we will then change our overall accrual methodology and it may result in pluses or minuses that will flow through the income statement and then ultimately reside in the accrued expense section in our balance sheet.

Speaker 5: are suddenly reduced for whatever reason or changed. We will then change our overall accrual methodology and it may result in pluses or minuses that will flow through the income statement and then ultimately reside in the accrued expense section in our balance.

Perfect a quick follow up here is on the design of Chalmette Sylvia seem to do kind of designed to meet changes being made one which is basically you stipulate hydrogen you spent kind of the facility. So you end up with an Rd facility, but then you end up with the refinery, which is slightly lower nameplate capacity the second obviously Houston.

Speaker 10: A quick follow-up here is on the design of shalmet. So we are seeing two kind of design changes being made. One, which is basically used for your hydrogen, you spread kind of the facility. So you end up with an RD facility, but then you end up with a refinery, which is slightly lower name plate capacity. The second obviously is that the RD facility is coming on at the refinery, but completely independent units. So there is no change to the name plate capacity. And I just wanted to understand, since you have done the engineering work here, when the project comes on, does the name plate capacity of shalmet change as it relates to refined?

The Rd facilities coming on.

The refinery would completely independent units. So there is no change to the nameplate capacity and I just wanted to understand that since you have done the engineering work here. When the project comes on does the nameplate capacity of Chalmette change as it relates to refining.

It's the latter as you describe it it will have zero impact on the operations at Chalmette.

Speaker 4: It's the latter as you described it. It will have zero impact on the operations at ShellMet. It will benefit from having all the utilities and all the infrastructure in place, but it will have zero impact on the refinery. Well, we bought the refinery. There was some idle equipment from back when there was a failed marriage between Exxon and Pettivasa. And so we're able to discreetly use the idle hydrocracker.

It will benefit from having all the utilities and.

All the infrastructure in place, but it will have zero impact on the refinery when we bought the refinery there were some idled equipment from back when there was a failed marriage between Exxon and Pedevesa and so we're able to discretely used the idled hydrocracker.

Speaker 4: and it's not connected in any way to the refinery operations.

And thats not connected in any way to the refinery operations.

Thank you so much for taking my question.

Thank you we have next question from the line of colleague Devonport with Goldman Sachs. Please go ahead.

Speaker 1: Thank you. We have next questions on the line up, Carly Devon Port, which Golan Sakslis

Hey, good morning, Thanks for taking the questions I just wanted to start on the liquidity side, you're still above 2 billion as of year end. So how how are you thinking about small liquidity levels. In this type of macro environment and I guess, just thinking about the strong equity performance. This year is there any appetite to tap the public markets to accelerate deleveraging or the renewable diesel investment.

Speaker 11: Hey, good morning. Thanks for taking the questions. I just want to start on the liquidity side. You're still above $2 billion as of your end. So how are you thinking about all liquidity levels in this type of macro environment? And I guess just thinking about the strong equity performance this year. Is there any appetite to tap the public markets to accelerate, deleverging, or the renewable diesel?

I'll take it in sequential order there I think at this point, given where current crude prices hydrocarbon prices are.

Speaker 5: I'll take it in sequential order there. I think at this point, given where current crude prices, hydrocarbon prices are, if we go back historically and look at where we were and adjust for, obviously having a bigger business today than the last time when crude prices were at this level, we would probably operate this business with between $750 billion of liquidity.

If we go.

Go back historically and look at where we were and adjust for obviously, having a bigger business today than the last time when crude prices were at this level, we would probably operate this business with between 750 and a $1 billion of liquidity.

That loosely translates into cash ranging from a day to day operational perspective anywhere from $250 million to $500 million.

Speaker 5: that loosely translates into cash ranging from a day-to-day operational perspective anywhere from $250 to $500 million. There will be swings, daily swings, but I think over a long period of time, assuming, again, kind of significant lack of volatility, those are reasonable numbers to assume.

There will be swings right daily swings, but I think over a long period of time assuming.

Again kind of significant lack of volatility those are reasonable numbers to assume.

Our first priority in 2022 is on making sure not only that we continue to operate well, but on essentially refinancing the bank facilities that we have in place. So that's our goal over the next six months.

Speaker 5: Our first priority in 2022 is on making sure not only that we continue to operate well, but on essentially refinancing the bank facilities that we have in place. So that's our goal over the next six months. Then I believe we will be able to start attacking, all right, how do we directionally get back to regular way liquidity? All of these assumptions.

And then I believe we will be able to start attacking alright, how do we directionally get back to regular way liquidity all of these assumptions are.

Predicated upon the forward curve that we see today.

Speaker 5: are predicated upon the forward curve that we see today or some derivative thereof coming to fruition.

Or some derivative thereof coming to fruition.

Speaker 5: Right now we're seeing huge tailwinds in our business. We expect those to continue.

Now, we're seeing huge tailwind in our business, we expect those to continue.

Then as we address in the latter half of this year and into next year lets assume the refinancing goes as planned then we will ultimately be continuing to execute on the renewable diesel project.

Speaker 5: Then as we address in the latter half of this year and into next year, let's assume the refinancing goes as planned, then we will ultimately be continuing to execute on the Renewable Diesel Project. We would then have a partner associated with that. We believe the combination of all of those things, along with the organic delivering that we should benefit from, right? Our business is trending significantly closer to a trailing 12 months evitoffigure.

We would then have a partner.

So as stated with that we believe the combination of all of those things along with the organic delevering that we should benefit from.

Our business is trending significantly closer to a trailing 12.

12 months EBITDA figure.

North of $1 billion versus where we were a year ago right things have changed significantly since the middle part of Q2 2021.

Speaker 5: of north of a billion dollars versus where we were a year ago. Things have changed significantly since the middle part of Q2 2021.

That's ultimately the strategy there are lots of moving pieces with all of that but that's everything that we have kind of laid out to achieve in 2022.

Speaker 5: That's ultimately the strategy. There are lots of moving pieces with all of that, but that's everything that we have kind of laid out to achieve in 2020.

Okay. The second piece.

Yeah.

I think it's difficult to really sit here and say that we're going to do anything in the capital markets on a go forward basis, we obviously pay attention to where the share prices, but ultimately.

Speaker 5: I think it's difficult to really sit here and say that we're going to do anything in the capital markets on a go forward basis. We obviously pay attention to where the share price is, but ultimately.

Our focus right now is on continuing to execute generating free cash flow to have both the organic deleveraging strategy.

Speaker 5: Our focus right now is on continuing to execute, generating free cash flow to have both the organic leveraging strategy along with, that is the biggest piece that will help us with this refinancing effort as we go for.

Along with that is the biggest piece that will help us with this refinancing effort as we go forward.

Great. That's really helpful. Thank you and then the follow up was just on the West Coast, which had a really strong quarter. It seems like there may have been some downtime from other operators and for Q, but just curious real time as we start the year here, what you're seeing in terms of supply demand balances in California.

Speaker 11: Great, that's actually helpful, thank you. And then the follow up was just on the West Coast, which had a really strong quarter. It seems like there may have been some downtime from other operators in 4Q, but just curious real time as we start the year here, what you're seeing in terms of supply demand bounces in California.

Yes, there were.

Speaker 3: Yeah, there were some issues in the fourth quarter, particularly in a Pacific Northwest.

Some issues in the fourth quarter, particularly in the Pacific Northwest.

And in fact, there was this severe weather event that hit the Bay area, we Fortunately all folks ROE through that and I'm very proud of them, but there were some issues, but as we sit here today, we have a very tight market on the west coast. It's clear demand has recovered.

Speaker 3: And in fact, there was this severe weather event that hit the Bay Area. We fortunately all folks wrote through that and I'm very proud of them, but there was some issues. But as we sit here today,

Speaker 3: We have a very tight market on the West Coast. It's clear demand is recovered. It slowed down a little bit here. It normally does in the first quarter because of it started raining out in California. But it's, it's, it's, the cracks have recovered. They're very strong.

Slow down a little bit here as it normally does in the first quarter because it started to rain out in California.

But it's it's cracks.

Cracks have recovered they're very strong.

Speaker 3: the crew differentials are being benefited by all the things we've already talked about including out in California, spread between Brent and the NANS, etc. Those fundamentals are there.

The crude differentials.

<unk> been benefited by all the things we've already talked around about.

Including out in California, and the spread between Brent and.

And a N S et cetera.

So those fundamentals are there.

And the other overriding factor is.

Speaker 3: And the other overriding factor is, you know, you folks have often said in the past that the West Coast or California is long, or refinery, or refinery in a half. Well, that's no longer the case.

You folks have often said in the past that.

The West Coast are California's long, a refinery or a refinery in a half a well that's no longer the case.

Obviously, the Avon refinery.

Speaker 3: because obviously the A-von refinery in Martinez was shut down. It's 160 day. The day always shut down some capacity as they converted to renewables. So you've got the less availability, good strong demand.

And Martina as we shut down at the 160 day.

The <unk> shut down some capacity.

As they converted to renewables, so you've got less availability good strong demand.

And the last piece I would say is our two refineries in California.

Speaker 3: And the last piece I would say is our two refineries in California.

Certainly if they are in the top five refineries on the West Coast No question in terms of their efficiency complexity and power.

Speaker 3: are certainly if they're in the top five refineries on the West Coast, no question, terms of their efficiency, complexity, and power.

Appreciate that color.

Yeah.

Thank you we have next question from the line of corner lineup.

Speaker 1: Thank you. We have next question from the line up corner line up. With Morgan Stanley , please go ahead.

With Morgan Stanley . Please go ahead.

Yes. Thanks, I wanted to return to that question around equity and I guess the question is just in light of your.

Speaker 9: Yes, thanks. I wanted to return to that question around equity. And I guess the question is just in light of your desire to bring a partner on a shell met.

Your your desire to bring a partner on at Chalmette.

Hum.

Are we to read from your comments that youre not considering equity at the site to suggest that the terms offered by.

Speaker 9: Are we to read from your comments that you're not considering equity at this time to suggest that the terms offered by the partners that you're discussing discussions with are favorable? So what you would see in the public markets, I guess basically I'm just curious, what types of structures you're contemplating and what type of economics you'd be looking at would

The partners that Youre discussing in discussions with or favorable to what you would see in the public markets I guess basically I'm just curious what types of structures Youre contemplating.

What type of economics, you would be looking to add on that side.

I think it's difficult to pin down an exact structure, what we've seen right. If we go back in time over 12 months ago. When this project really started to pick up steam internally clearly PBF was in a different financial position the market.

Speaker 5: I think it's difficult to pin down an exact structure. What we've seen, right, if we go back in time over 12 months ago, when this project really started to pick up steam internally, clearly PDF was in a different financial position, the market.

<unk> had a significant amount of forward uncertainty on what was coming at us.

Speaker 5: had a significant amount of forward uncertainty on what was coming at us.

And what we've seen over the past 12 months is not only has our project continues to be derisked internally, but we've seen a variety of different structures, we've seen everything from feedstock joint ventures more recently, we've seen one of our peers.

Speaker 5: And what we've seen over the past 12 months is not only has our project continued to be de-risk internally, but we've seen a variety of different structures. We've seen everything from feedstock joint ventures. More recently we've seen one of our peers who ultimately ended up capitalizing a project using a variety of call it project slash structured finance.

Who ultimately ended up capitalizing a project using a variety of call. It project slash structured finance, so not to say, there's a million different ways to structure. These things, but I think we have some internal views on overall, where things can go we will.

Speaker 5: So not to say there's a million different ways to structure these things, but I think we have some internal views on overall where things can go. We will.

Ultimately do what we believe is the right thing in terms of optimizing the structure and making sure that the structure fits within not only where we are today, but where we expect to be over the next couple of years as well.

Speaker 5: Ultimately do what we believe is the right thing in terms of optimizing the structure and making sure that the structure fits within Not only where we are today, but where we expect to be over the next couple years as well It could involve some type of equity partner for math comments. It could involve a strategic partner Those two partners could be one and the same it could end up being simply a financial partner that comes in and helps us finance

Could involve some type of equity partner for Matt's comments it could involve a strategic partner those two partners could be one and the same it could end up being simply a financial partner that comes in and helps US finance at the same time, we do believe there are other avenues, whether there are federally funded programs we do.

Speaker 5: At the same time, we do believe there are other avenues, whether there are federally funded programs. We do have PBF logistics as well. There's a variety of different ways that this thing can be structured. I think that's why, quite frankly, having the assistance of a financial advisor as we make this kind of final piece of the puzzle fit together, that's going to be the most important thing for us over the next six months.

PBF logistics as well.

There's a variety of different ways that this thing can be structured I think that's why quite frankly, having the assistance of a financial adviser as we make this kind of a final piece of the puzzle.

Together, that's going to be the most important thing for us over the next six months.

Yes.

Understood.

Speaker 9: understood and you were alluding to the, you know, the need to have feedstock flexibility there. Just confirming are you in favor of some sort of feedstock partnership? Do you think that's, you know, going to be a necessary strategic pillar of the project you're turning?

You were alluding to the need to have feedstock flexibility there.

Just confirming or are you in favor of some sort of feedstock partnership.

Do you think thats going to be a necessary strategic pillar of the project returns.

No I don't think it's a necessary step where we're looking to maximize our efficiency and acquiring the most economic fees that very well could come in with a partnership but we certainly believe we'll have the capability to acquire the fees necessary we have.

Speaker 4: No, I don't think it's necessary, Steph. We're looking to maximize our efficiency in acquiring the most economic feeds that very well could come in with a partnership, but we certainly believe we'll have the capability to acquire the feed necessary. We have potentially been around the market and we'll work over the next year to staff up our capabilities specifically on some of the specific feeds, but there's no requirement.

Tangentially been around the market.

Work over the next year or two.

Staff up our capabilities specifically on on some of the specific page.

But there's no requirement.

Alright, I appreciate the context I'll turn it back.

Thank you we have next question from the line of Karl Blunden with.

Speaker 1: Thank you. We have an expression from the line of Karl Blunden with Goldman Sachs, please go ahead.

Goldman Sachs. Please go ahead.

Hi, good morning, Thanks for all the time and the color on the capital structure.

Speaker 6: I can want to thanks for all the time and the color on the capital structure. You know, with the improved performance, both of the bonds and the company itself, you have some more options opening up to you on the cap stack.

With the improved performance both of the bonds and a company itself you have some more options opening up to you on the cap stack.

When you think about the mixed you'd like between secured and unsecured bonds over time is there.

Speaker 6: When you think about the mix you'd like between secured and unsecured bonds over time, is there something you can share on that that the secures do come with some covenants that

Something you can share on that the securities do come with some covenants that.

Speaker 6: you know limit flexibility in some way so just be interested in that especially with those high coupon figures becoming callable later this year

Limited flexibility in some way so I'd just be interested in that especially with the high coupon securities becoming callable later this year.

I think our message is relatively consistent with going back to May of 2020, when we raised the first $1 billion tranche of secured notes that ultimately that was an insurance policy. We did oversize. It on the front end and we saw an opportunity to raise another $2 50 in December of 'twenty in hindsight that.

Speaker 5: I think our message is relatively consistent with going back to May of 2020 when we raised the first billion dollar tranche of secured notes that ultimately that was an insurance policy. We did oversized it on the front end and we saw an opportunity to raise another 250 in December of 2020. In hindsight, that proved to be absolutely the right decision for PBF simply because the pandemic went on longer than we believe anyone originally expected.

Proved to be absolutely the right decision for PBF simply because of the pandemic went on longer than we believe anyone originally expected.

So our view has not changed this is an insurance policy and over time, what we have outlined to investors to rating agencies and to the market is our long term goal is to get back inside of that 40% net debt to cap number.

Speaker 5: So our view has not changed. This is an insurance policy and over time.

Speaker 5: What we have outlined to investors to radiate in seas and to the market is our long-term goal is to get back inside of that 40% net debt to cap numbers.

We understand that that will take some time again, it's going to come not only just with re maneuvering within the cap stack, but we're going to have an inherent delevering again as our business continues to improve we've gone from losing money a year ago to.

Speaker 5: We understand that that will take some time. Again, it's going to come not only just with remanivering within the cap stack, but we're going to have an inherent delivering. Again, as our business continues to improve, we've gone from losing money a year ago.

To now being in a position, where we're covering all of our fixed costs plus some.

Speaker 5: to now being in a position where we're covering all of our fixed cost plus sum.

Speaker 5: Again, we have an insurance policy that's sitting on the balance sheet. We are carrying around an awful lot of cash. Again, that we don't need for day-to-day operations. Our goal, longer term, will be to get back to a fully unsecured cap structure. We believe that is the appropriate structure, the regular way environment, for a publicly traded independent refining business.

We have an insurance policy, that's sitting on the balance sheet, we are carrying around an awful lot of cash again that we don't need for day to day operations. Our goal longer term will be to get back to a fully unsecured cap structure. We believe that is the appropriate structure.

Regular way environment for a publicly traded independent refining business.

So that's all really helpful. Eric in terms of Poles, where we spoke a little bit about.

Speaker 6: I think that's all really helpful, Eric. In terms of polls where we spoke a little bit about potentially some capacity coming back, but you're looking at the market, if and when you do make a decision to bring that up and fully ramp back to pre-COVID levels, do you have a sense of how long that would take once you make that decision and what the cost would be at this point?

Potentially some capacity coming back, but you know you're looking at the market when you do.

If and when you do make a decision to bring that up and fully ramp back to pre COVID-19 levels. Do you have a sense of how long that would take once you make that decision and what the costs would be at this point.

And just just so there's.

Speaker 4: And just so there's, you know, clarity. At the moment, that's not the thing we're considering.

The clarity.

At the moment, that's not something we're considering.

It would take a couple of months it would not be extraordinary in regards to capital there'd be some work done but at the moment, where we're sticking to what we have and we can obviously reevaluate that.

Speaker 4: It would take a couple months. It would not be extraordinary in regards to capital. There would be a some work done. But at the moment, we're sticking to what we have. And we can obviously reevaluate that. We preserve the equipment. But I don't want anyone listening to this call to come away with the idea that we're in the process of restarting the major equipment that was shut down.

Reserve the equipment, but I don't want anyone listening to this call.

I come away with the idea that where we're in the process of restarting the major equipment that was shut down.

Understood Thanks very much.

Thank you we have next question from the line of Jason Gamble men with Cowen. Please go ahead.

Speaker 1: Thank you. We have an express train from the line of Jason Gabelman with Colin, please call ahead.

Hi, Yeah. Good morning, Thanks for taking my question.

Speaker 12: Yeah, good morning. Thanks for taking my question. I just wanted to first ask maybe about the cash outlies for the RFS program moving forward. My understanding based on the current timeline is there won't be another cash outlay due to the government until

I just wanted to first ask maybe about the cash outlays for the RFS program moving forward.

My understanding based on the current timeline is there won't be another cash outlay due until the government until.

2023, the 2021 rent obligation in 2022, both due in 'twenty three can you just confirm that maybe elaborate on the timing of those two are yearly payments and then the follow up is just back on the Chalmette renewable diesel project, you said you've been kind of.

Speaker 12: 2023 the 2021 Ren obligation and 2022 both doing 23 you just confirmed that and maybe elaborate on the timing of those two yearly payments and then the follow-up is just Back on the shell net renewable diesel project you said you've been kind of progressing it over the past year and it seems like at least in the equity markets the Support around renewable diesel equities has

Progressing it over the past year and it seems like at least in the equity markets.

<unk> support around renewable diesel equities has.

We can and so the question is can you characterize how your conversations have been going with potential partners in the project over the past year have you seen more interest less.

Speaker 12: weekend and so the question is, can you characterize how your conversations have been going with potential partners in the project over the past year? Have you seen more interest less? Has that interest been more enthusiastic or less? Any type of characterization would be helpful. Thanks. I think Eric alluded to it. Your...

Is that interest been more enthusiastic or less any any type of character organization would be helpful. Thanks.

I think Eric alluded to it.

A year ago, when we were talking about.

The renewable diesel project much of it was more theoretical.

Speaker 4: The renewable diesel project, much of it was more theoretical.

Speaker 4: and an idea, we've made tremendous progress over the last year.

And an idea we've made tremendous.

Progress over the last year.

And so like I said, all the engineering is complete all the permitting is done we've started putting pilings into the ground and so it's becoming much more real in terms of the marketplace we view.

Speaker 4: And so like you say all the engineering is complete all the permitting is is done We've started putting pilings into the ground And so it's becoming much more real in terms of the marketplace. We view our position

Our position is.

As I mentioned before in our advantages puts us in an advantageous position.

Speaker 4: As I mentioned before in our advantages puts us in an advantageous position and I at the end of the day believe as does the company that there is going to be a market place.

At the end of the day believe.

Does the company that there is going to be a market place.

<unk>.

Incentivized and you're going to have to have government involvement incentivize to manufacturer renewable diesel.

Speaker 4: incentivized and you're going to have to have government involvement incentivized to manufacture renewable diesel.

Speaker 4: It's not only a reference of this country, but the rest of the world.

Not only our preference of this country, but the rest of the world.

Speaker 4: And that can come in the form of the margin itself, but obviously you have Blender's tax credits, you have RINs, you have LCFS programs, and we're not projecting any one program One aspect of it, but in general

And that can come in the form of the margin itself, but obviously you have.

Lenders tax credits you Renz, you have L CFS programs and we're not projecting any one program.

One aspect of it but in general the price of carbon going forward. We believe there is going to be a market incentive to manufacturer renewable diesel we think we're going to be very well positioned to do that considering all the strengths we bring to it in regards to the rins timing of payments of course, it's a political program thats broken that doesn't live up.

Speaker 4: and the price of carbon going forward, we believe there's going to be a market incentive to manufacture a noble diesel. We think we're gonna be very well positioned to do that considering all the strengths we bring to it. In regards to the rents, timing of payments, of course it's a political program that's broken, it doesn't live up to any of its stated requirements. So when the payments are due, is anyone's guess because it'll depend on when the final rule comes out. You have to remember what came out previously,

Any of its stated our requirements. So when the payments are due is anyone's guess because it will depend on when the final rule comes out you have to remember what came out previously was a.

Speaker 4: was a uh... you know the recommendation and then they took comments on it but the final rule has yet to come out that's where we think there's a reasonable chance that they may reconsider what they propose uh... but

The recommendation and then they took comments on it but the final rule is yet to come out and that's where we think there's a reasonable chance that they may reconsider what they propose.

But the timing of which we.

We will completely depend.

Speaker 4: will completely depend, you know, the ultimate RVO deadline.

The ultimate RVO deadlines.

Speaker 4: will depend on when that final rule comes out. So the 2020, it's possible, it could be at the end of this year, but it's possible that could be pushed if the final rulemaking doesn't come out for some time. So I think if they stuck to something this spring, the 20s may be December 1, but when do they actually put it out? If you find out, let me know.

Will will depend on when that final rule comes out so the 2020, it's possible it could be at the end of this year, but it's possible that could be pushed up the final.

Rulemaking doesn't come out for some time.

So I think if they start to something this spring that 'twenty is maybe December one but.

When when do they actually put it out if you find out let me know.

The other thing just to note two on renewable diesel that we should make note of here is not only is chalmette strategically located it has the benefit of this idled equipment. We are able to essentially take advantage of extremely large industrial and sit to infrastructure with hydrogen and steam et cetera.

Speaker 5: The other thing just to note to unrenewable these are that we should make note of here is

Speaker 5: Not only is ShellMet strategically located, it has the benefit of this idle equipment. We are able to essentially take advantage of extremely large industrial and sit to infrastructure with hydrogen steam, et cetera. But we also have the other end with the only really true available domestic LCFS program. We are a very large operator in California. We're in the LCFS market.

But we also have the other end with the only really true available domestic L. CFS program. We are a very large operator in California were in the <unk> market everyday we control our own proprietary distribution system as well in California. So we can not only bring product in.

Speaker 5: We control our own proprietary distribution system as well in California. So we can not only bring product in, we can distribute through, again, assets that we control today.

Can distribute through again assets that we control today.

That's an important point when we think through the overall value chain supply chain of not only producing this stuff, which again what do we need to do we're good at capital projects were good at execution.

Speaker 5: That's an important point when we think through the overall value chain, supply chain, of not only producing this stuff, which again, what do we need to do? We're good at capital projects, we're good at execution. Matt mentioned we are in the process of staffing up a team on the feedstock side of things. And quite frankly, we already have the product disposition side of things from our perspective based on where the market is today is California.

Matt mentioned, we are in the process of staffing up a team on the feedstock side of things and quite frankly, we already have the product disposition side of things from our perspective based on where the market is today is California.

It looks as if new Mexico will potentially be coming at some point, Canada will be coming we believe there will be other markets Europe is an available market as well, but when we think through what is one of the largest kind of consumers of renewable diesel today and the state of California, we.

Speaker 5: It looks as if New Mexico will potentially be coming at some point. Canada will be coming. We believe there will be other markets. Europe is an available market as well. But when we think through what is one of the largest kind of consumers of renewable diesel today in the state of California, we believe we have an added advantage there as well.

We believe we have an added advantage there as well.

This gave them then do you have any further questions.

Oh.

Right no that was it for me thanks.

Thank you we have a final question from the line of Matthew Blair with Tudor Pickering Holt. Please go ahead.

Speaker 1: Thank you. We have a final question from the line of Matthew Blair with two-door P-Cring holster. Please go ahead.

Hey, good morning, Thanks for taking my question I'll, just end with one here.

Speaker 13: Hey, good morning. Thanks for taking my question. I'll just end with one here. So I had to add a question on the California market. The Q3 LCFS data showed that about 33% of diesel consumed in the state was either biodiesel or renewable diesel. And so my question is, are torrents and Martinez?

So I had a question on the California market. The Q3, I'll see PFS data showed that about 33% of diesel consumed in the state was either biodiesel or renewable diesel.

And so my question is are our Torrance and Martinez are they still able to place 100% their diesel production in the state or have you had to.

Speaker 13: Are they still able to place 100% of their diesel production in the state or have you had to I guess look for new markets, you know, exports from the diesel to Singapore or Canada or Mexico?

I guess look for new new markets, you know export some of that you sold to Singapore, or Canada or Mexico.

We are.

Speaker 3: No, we're selling all of our diesel out of those two refineries on the West Coast.

Selling all of our diesel out of those two refineries on the West coast.

Great. Thank you.

Okay.

Thank you.

Speaker 1: Thank you. We're reached the end of the question and answer session. And now I'd like to turn the call over to Tom Nimbley for closing remarks. Over to you.

We have reached the end of the question and answer session and I would like to turn the call over to Tom Nimbly for closing remarks, how about you.

Thank you and thank everybody for attending the call today, we look forward to our next call with you.

Speaker 3: Thank you and thank everybody for attending the call today. We look forward to our next call with you. We hope to give you further clarity and updates on our key priorities, including the leveraging and the progress on the renewable visual project. Everybody have a great day.

I hope to give you further clarity and updates on our key priorities, including deleveraging and the progress on the renewable diesel project everybody have a great day.

Thank you very much this concludes today's conference.

And you May now disconnect your lines at this time, thank you for your participation.

Speaker 1: You may now disconnect your lines at this time. Thank you for your participation.

Yeah.

Okay.

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