Q3 2025 PBF Energy Inc Earnings Call

Speaker #3: If anyone should require operator assistance during the conference , please press Star Zero on your telephone keypad . Please note this conference is being recorded .

Speaker #3: It is

Speaker #3: now my pleasure to turn the floor over to Colin Murray of investors relations . Sir , you may begin .

Speaker #4: Thank 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 consistent with our prior periods .

Joe Marino: Thank you, Lily. Good morning and welcome to today's call. With me today are Matthew Lucey, our CEO, Michael Bukowski, our Head of Refining, Joe Marino, our CFO, and several other members of our management team. Copies of today's earnings release and our 10-Q filing, including supplemental information, are 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 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 consistent with our prior periods. We'll discuss our results excluding special items, which are described in today's press release. Also included in the press release is forward-looking guidance information. For any questions on these items or other follow-up questions, please contact Investor Relations following the call.

Speaker #4: We'll discuss our results excluding special items , which are described in today's press release . Also included in the press release is forward looking guidance information for any questions on these items or other follow up questions , please contact Investor Relations .

Speaker #4: Following the call , I'll now turn the call over to Matt Lucey .

Joe Marino: I'll now turn the call over to Matthew Lucey.

Speaker #5: Thanks , Colin . Good morning , everyone , and thank you for joining our call . First , I'd like to welcome and introduce Joe Marino as PBS's new Chief Financial Officer .

Matthew Lucey: Thanks, Colin. Good morning everyone and thank you for joining our call. First, I'd like to welcome and introduce Joe Marino as PBF Energy's new Chief Financial Officer. Many on the call may be familiar with Joe as he's been with PBF Energy since before our 2012 IPO and has been our Treasurer for the last five years. In the same breath, I'd like to thank Karen Davis for her service and I'm thrilled to welcome her back to the Board of Directors. I want to address three topics. One, the status of Martinez. Two, our third quarter performance, and lastly, the near term outlook regarding Martinez. Consistent with our call in July, we are on schedule for a December restart. Maintenance teams are scheduled to be turning over the impacted units to operations in early December.

Speaker #5: Many on the call may be familiar with Joe , as he has been with PBS since before our 2012 IPO , and has been our treasurer for the last five years .

Speaker #5: In the same breath , I'd like to thank Karen Davis for her service , and I'm thrilled to welcome her back to the Board of Directors .

Speaker #5: I want to address three topics on the status of Martinez to our third quarter performance . And lastly , the near-term outlook regarding Martinez .

Speaker #5: Consistent with our call in July , we are on schedule for a December restart . Maintenance teams are scheduled to be turning over the impacted units to operations in early December , as units get handed over .

Matthew Lucey: As units get handed over, we will commence a deliberate and sequential restart of the affected units. Our plan is to have Martinez fully operational by the end of the year. The dedication of the Martinez team in this effort continues to be exemplary. While PBF Energy's third quarter represented a sequential improvement over the prior few quarters, the real news is the sequential improvement that occurred during the quarter. Unquestionably, there was a shift in September which represented a significant positive step in the right direction. While product cracks were relatively strong throughout the quarter, crude differentials only began to improve towards the end of the quarter. Now, as we sit in what is typically the seasonally weaker period, product cracks are quite strong and crude differentials continue to widen.

Speaker #5: We will commence a deliberate and sequential restart of the affected units . Our plan is to have Martinez fully operational by the end of the year .

Speaker #5: The dedication of the Martinez team in this effort continues to be exemplary . While PBS's third quarter represents a sequential improvement over the prior few quarters , the real news is the sequential improvement that occurred during the quarter .

Speaker #5: Unquestionably , there was a shift in September , which represented significant positive step in the right direction . While product cracks were relatively strong throughout the quarter , crude differentials only began to improve towards the end of the quarter .

Speaker #5: Now , as we sit and what is typically the seasonally weaker period , product cracks are quite strong and crude differentials continue to widen as we look past the fourth quarter into 26 refined product supply constraints , coupled with a well-supplied crude market , should create a positive theme for domestic and global refining .

Matthew Lucey: As we look past the fourth quarter into 2026, refined product supply constraints coupled with a well supplied crude market should create a positive theme for domestic and global refining. Global demand continues to outstrip net refining capacity additions and we expect to see additional capacity rationalizations that will be supportive of tight product balances. As we saw this month with the shutdown of another refinery in California, PBF Energy remains focused on controlling the aspects of our business that we can control. We expect to be well positioned to capture favorable market conditions as we move forward. To be successful and enhance value for our investors, we must operate safely, reliably, and responsibly, and we must do it as efficiently as possible. To that end, we are on track with our commitment to our business improvement initiatives. We are working to improve our performance every day.

Speaker #5: Global demand continues to outstrip net refining capacity . Additions , and we expect to see additional capacity rationalizations that will be supportive of tight product balances .

Speaker #5: As we saw this month with the shutdown of another refinery in California . PBF remains focused on controlling the aspects of our business that we can control .

Speaker #5: We expect to be well positioned to capture favorable market conditions as we move forward to be successful , enhance value for our investors .

Speaker #5: We must operate safely , reliably , and responsibly , and we must do it as efficiently as possible . To that end , we are on track with our commitment to our business improvement initiatives .

Speaker #5: We are working to improve our performance every day . So to summarize , strong product cracks with improving crude dynamics , coupled with the full power of our refining system as Martinez should be up by the end of the year , operating with improved efficiency thanks to our RBI program , all of which should come together to create a dynamic environment for the company and our shareholders .

Matthew Lucey: To summarize, strong product cracks with improving crude dynamics coupled with the full power of our refining system as Martinez should be up by the end of the year operating with improved efficiency thanks to our RBI program, all of which should come together to create a dynamic environment for the company and our shareholders. With that, I'll turn it over to Mike.

Speaker #5: And with that , I'll turn it over to Mike .

Speaker #6: Thank you . Matt . Good morning everyone . Before discussing the progress of our refining business improvement program , or RBI for short , I'll provide a few comments on third quarter operations and our Martinez refinery status .

Michael Bukowski: Thank you, Matt. Good morning everyone. Before discussing the progress of our Refining Business Improvement (RBI) program, I'll provide a few comments on third quarter operations and our Martinez refinery status on the West Coast. We continue to progress with the full repair and restart of Martinez. We plan to begin transitioning from maintenance to operations in early December. This time we will execute a methodical sequence startup plan with its primary focus being the safe and environmentally sound restart of the repaired processing units. Our Martinez team has completed a tremendous amount of work this year. To give you a little bit of an idea as to the scale of this effort, in addition to completing the FCC turnaround, we are installing 130 tons of new steel, laying over 20,000 ft of pipe, and over 200,000 ft of electrical and instrument cabling.

Speaker #6: On the West Coast , we continue to progress with the full repair and restart of Martinez . We plan to begin transitioning from maintenance to operations in early December .

Speaker #6: This time , we will execute a methodical sequence startup plan with its primary focus being the safe and environmentally sound restart . The repaired processing , processing units .

Speaker #6: Our Martinez team has completed a tremendous amount of work this year . To give you a little bit of an idea as to the scale of this effort .

Speaker #6: In addition to completing the FCC turnaround , we are installing 130 tons of new steel , laying over 20,000ft of pipe and over 200,000ft of electrical and instrument cabling , all major equipment components have arrived on site and we have completed installation of the two major columns that had to be replaced .

Michael Bukowski: All major equipment components have arrived on site and we have completed installation of the two major columns that had to be replaced. I commend our Martinez team for continuing to execute the repair work safely while the team is focused on restoring operations. We will not let time be a constraint from executing the startup safely. While there has been a lot of focus on Martinez, our team at Torrance successfully and safely completed the hydrocracker turnaround in the third quarter. At Toledo, a mid-summer hydrocracker unplanned outage and pipeline maintenance impacted third quarter throughput. Aside from a few minor issues, the rest of our system operated reasonably well in the quarter and we have no major turnaround work for the remainder of the year.

Speaker #6: I commend our Martinez team for continuing to execute the repair work safely while the team is focused on restoring operations , we will not let time be a constraint from executing the start up safely .

Speaker #6: While there has been a lot of focus on Martinez , our team at Torrance successfully and safely completed the Hydrocracker turnaround in the third quarter at Toledo and mid-summer hydrocracker unplanned outages and pipeline maintenance impacted third quarter throughput .

Speaker #6: Aside from a few minor issues , the rest of our system operated reasonably well in the quarter , and we have no major turnaround work for the remainder of the year .

Speaker #6: Shifting topics to RBI, we are on track to meet our previously announced goal to implement $230 million of annualized run rate savings by the end of 2025.

Michael Bukowski: Shifting topics to RBI, we are on track to meet our previously announced goal to implement $230 million of annualized run-rate savings by the end of 2025. This goal represents $0.50 per barrel, or approximately $160 million reduction in operating expenses against our 2024 benchmark and will be fully realized in 2026. In addition, we expect to reduce sustaining capital and turnaround expenditures by $70 million. As you may recall, we started this program with centralized efforts in procurement, capital projects, organizational design, turnarounds, and site efforts at our Torrance and Delaware Valley refineries. As of the third quarter, all refineries are engaged in RBI and are contributing to the savings goals. One of the recent successes achieved through the RBI program is a 5% cost reduction of our Torrance hydrocracker turnaround through our Productivity Improvement Initiative.

Speaker #6: This goal represents $0.50 per barrel or approximately $160 million reduction in operating expenses against our 2024 benchmark , and will be fully realized in 2026 .

Speaker #6: In addition , we expect to reduce sustaining capital and turnaround expenditures by $70 million . As you may recall , we started this program with centralized efforts in procurement capital projects , organizational design , turnarounds , and site efforts at our Torrance and Delaware Valley refineries .

Speaker #6: As of the third quarter , all refineries are engaged in RBI and and are contributing to the savings goals . One of the recent successes achieved through the RBI program is a 5% cost reduction of our Torrance , Hydrocracker , turnaround through our product productivity Improvement initiative .

Speaker #6: This program uses dedicated resources to identify and eliminate waste and remove barriers to job productivity . Additionally , we've achieved approximately $21 million in run rate savings by revamping our procurement model to leverage our spend across the refining circuit .

Michael Bukowski: This program uses dedicated resources to identify and eliminate waste and remove barriers to job productivity. Additionally, we've achieved approximately $21 million in run-rate savings by revamping our procurement model to leverage our spending across the refining circuit system wide. We are focusing on improving our maintenance efficiency and reinvesting some of the savings in energy reduction projects while also reducing our maintenance backlogs. The outcome will have the dual effect of improved energy efficiency and reliability. We are providing enhanced performance monitoring tools to our employees and incorporating them into our site work processes across the floor. The new tools and processes will drive the organization to not only maintain our savings, performance, and efficiency, but drive continuous improvement. Our main priority will always be to focus on safe, reliable, and responsible operations across our system.

Speaker #6: System wide , we are focusing on improving our maintenance efficiency and reinvesting some of the savings in energy reduction projects . While also reducing our maintenance backlogs .

Speaker #6: The outcome will have the dual effect of improved energy efficiency and reliability . We are providing enhanced performance monitoring tools to our employees and incorporating them into our site work processes across the fleet .

Speaker #6: The new tools and processes will drive the organization to not only maintain our savings performance and efficiency , but drive continuous improvement . Our main priority will always be to focus on safe , reliable and responsible operations across our system .

Speaker #6: RBI will help us improve across all areas and result in a sustainable culture of operational excellence and continuous improvement . With that , I'll now turn the call over to Joe Marino for our financial overview .

Michael Bukowski: RBI will help us improve across all areas and result in a sustainable culture of operational excellence and continuous improvement. With that, I'll now turn the call over to Joe Marino for our financial overview.

Speaker #4: Thanks , Mike .

Joe Marino: Thanks, Mike. For the third quarter we reported an adjusted net loss of $0.52 per share and an adjusted EBITDA of $144.4 million. Our discussion of third quarter results excludes the net effect of special items including $14.6 million in incremental OpEx related to the Martinez refinery, a $250 million gain on insurance recoveries, a $94 million gain on the sale of terminal assets, an $8.5 million loss relating to PBF's 50% share of St. Bernard Renewables' LCM inventory adjustment for the quarter, and approximately $8 million of charges associated with the RBI initiative. The $250 million gain on insurance recoveries related to the Martinez fire is a result of the second unallocated payment agreed to at the end of the third quarter, of which the majority has already been received in Q4. Going forward, we will continue to work with our insurance providers for potential additional interim payment.

Speaker #7: , for the third quarter , we reported an adjusted net loss of $0.52 per share and adjusted EBITDA of $144.4 million . Our discussion of third quarter results excludes the net effect of special items , including 14.6 million in incremental opex related to the Martinez refinery incident , a $250 million gain on insurance recoveries , a $94 million gain on the sale of terminal assets , an $8.5 million loss relating to PBS , 50% share of SBS , LCM inventory adjustment for the quarter , and approximately 8 million of charges associated with the RBI initiative .

Speaker #7: The $250 million gain on insurance recoveries related to Martinez is a result of the second unallocated payment agreed to at the end of the third quarter , of which the majority has already been received .

Speaker #7: In Q4 . Going forward , we will continue to work with our insurance providers for potential additional interim payment . However , the timing and amount of any agreed upon future payments will be dependent on the amount of incurred covered expenditures plus calculated business interruption losses .

Joe Marino: However, the timing and amount of any agreed upon future payments will be dependent on the amount of incurred covered expenditures plus calculated business interruption losses. Our Q3 P&L reflects incremental OpEx at Martinez of $14.6 million that we are reflecting as a special item because it relates to construction of temporary equipment to restart undamaged units and other fire-related non-capital expenses. While we anticipate recovering a portion of this amount through insurance, the specific amount will be determined as we progress further into the claims process. Generally speaking, any insurance proceeds received in future periods will be reflected as gain on insurance recoveries on our income statement and reported as a special item, shifting back to our normal quarterly results. Also included in our results is a $19.7 million loss related to PBF's equity investment in St. Bernard Renewables.

Speaker #7: Our Q3 PNL reflects incremental opex at Martinez of $14.6 million that we are reflecting as a special item because it relates to construction of temporary equipment to restart undamaged units and other fire related non-capital expenses .

Speaker #7: While we anticipate recovering a portion of this amount through insurance, the specific amount will be determined as we progress further into the claims process.

Speaker #7: Generally speaking , any insurance proceeds we receive in future periods will be reflected as gain on insurance recoveries on our income statement and reported as a special item .

Speaker #7: Shifting back normal quarterly results discussion also included in our results is a $19.7 million loss related to PBS equity investment in Saint Bernard Renewables .

Speaker #7: SBR produced an average of 15,400 barrels per day of renewable diesel in the third quarter . Espers production was somewhat below guidance , driven by broader market conditions in the Renewable fuel space .

Joe Marino: SBR produced an average of 15,400 barrels per day of renewable diesel in the third quarter. SBR's production was somewhat below guidance driven by broader market conditions in the renewable fuel space. Throughout the year, we've seen impacts from tariffs cascade through the feed markets and the policy landscape continues to shift, adding uncertainty and volatility to the business. PBF's cash flow from operations for the quarter was approximately $25 million, which includes a working capital draw of approximately $74 million, primarily related to the timing of cash interest payments, movements in inventory, and falling commodity prices. Also included in our cash flow for the quarter are the previously announced tax refund of $75 million, including interest, and the $175 million received for the sale of the Knoxville and Philadelphia terminal assets, excluding commission and closing costs.

Speaker #7: Throughout the year , we've seen impacts from tariffs cascade through the feed market and the policy landscape continues to shift , adding uncertainty and volatility to the business .

Speaker #7: Pvfs cash flow from operations for the quarter was approximately $25 million , which includes a working capital draw of approximately $74 million , primarily related to the timing of cash interest payments , movements in inventory , and falling commodity prices .

Speaker #7: Also included in our cash flow for the quarter are the previous announced tax refund of $75 million , including interest , and $175 million received for the sale of the Knoxville and to our Philadelphia terminal assets , excluding commission and closing costs .

Speaker #7: Cash invested in consolidated CapEx for the third quarter was approximately $130 million , which includes refining , corporate and logistics . This amount excludes third quarter capital expenses of approximately $120 million related to the Martinez incident .

Joe Marino: Cash invested in consolidated CapEx for the third quarter was approximately $132 million, which includes refining, corporate, and logistics. This amount excludes third quarter capital expenses of approximately $128 million related to the Martinez incident. Year to date rebuild capital expenses through the end of the third quarter are approximately $260 million. Additionally, our Board of Directors approved a regular quarterly dividend of $0.275 per share. We ended the quarter with $482 million in cash and approximately $1.9 billion of net debt. Maintaining our firm financial footing and a resilient balance sheet remain priorities. At quarter end, our net debt to cap was 32% and our current liquidity is approximately $2.1 billion based on current commodity prices, cash, and borrowing capacity under our ABL.

Speaker #7: Year to date , rebuild capital expenses through the end of the third quarter are approximately $260 million . Additionally , our board of directors approved a regular quarterly dividend of 27.5 cents per share .

Speaker #7: We ended the quarter with $182 million in cash and approximately $1.9 billion of net debt . Maintaining our financial , our firm financial footing and a resilient balance sheet remain priorities at quarter end .

Speaker #7: Our net debt to Cap was 32% , and our current liquidity is approximately 2.1 billion . Based on current commodity prices , cash and borrowing capacity .

Speaker #7: Under our ABL , if you take into consideration the second installment of our insurance proceeds already received in Q4 , our liquidity and net debt position has improved versus the prior quarter .

Joe Marino: If you take into consideration the second installment of our insurance proceeds already received in Q4, our liquidity and net debt position has improved versus the prior quarter. As we look ahead, we expect to use periods of strength to focus on deleveraging and preserving the balance sheet. We've completed our opening remarks and we'd be pleased to take any questions.

Speaker #7: As we look ahead, we expect to use periods of strength to focus on deleveraging and preserving the balance sheet. Operator, we've completed our opening remarks, and we'd be pleased to take any questions.

Speaker #3: In a moment , we will open the call to questions . The company requests that all callers limit each turn to one question and one follow up .

Operator: In a moment we will open the call to questions. The Company requests that all callers limit each turn to one question and one follow up. You may rejoin the queue with additional questions. If you would like to ask a question, please press Star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment while we poll for questions. Your first question comes from Manav Gupta from UBS. Please go ahead.

Speaker #3: You may rejoin the queue with additional questions . If you would like to ask a question , please press star one on your telephone keypad .

Speaker #3: A confirmation tone will indicate your line is in the question queue . You may press star star two . If you would like to remove your question from the queue for participants using speaker equipment , it may be necessary to pick up your handset before pressing the star key's one moment while we pull for questions .

Speaker #3: Your first question comes from Manav Gupta from UB . Please go ahead .

Speaker #8: Morning team would like to first welcome Joe in his new role and wish him all the luck in this role . Matt . Maybe for you or somebody else , but just I mean , you made some positive comments about Martin restart .

Manav Gupta: Morning team, would like to first welcome Joe in his new role and wish him all the luck in this role. Matt, maybe for you or somebody else, but just, I mean you made some positive comments about Martinez restart. I think there's a lot of focus on that given the capacity closures that are happening. Yes, some new pipelines might get built, but that could take two to three years. The key here is to get that refinery up and running. I'm just trying to understand your confidence level in getting this thing across the line. I understand sometimes there could be regulatory delays, but looks like the government wants you to get this up and running. Help us understand where we are in the process and your confidence level in getting this asset up and running by year end.

Speaker #8: I think there's a lot of focus on that given the capacity closures that are happening . And yes , some new pipelines might get built , but that could take 2 to 3 years .

Speaker #8: So the key here is to get that refinery up and running . And I'm just trying to understand your confidence level in getting this thing across the line .

Speaker #8: I understand , you know , sometimes there could be regulatory delays , but looks like the government wants you to get this up and running .

Speaker #8: So help us understand where we are in the process . And your confidence level in getting this asset up and running by year end .

Speaker #5: Thanks , Manav . I don't anticipate any regulatory issues . To be clear , we have we have all our permits and we've had good working relationship with the state .

Matthew Lucey: Thanks, Manav. I don't anticipate any regulatory issues, to be clear. We have all our permits, and we've had a good working relationship with the state. As you said, I think they're very, very interested in getting the refinery back up and running. I have tremendous confidence in our team. They have done amazing work to get us to this point. It is a major lift, as Michael Bukowski can detail. Any project that a refinery does usually has years of advance work done. When you have an unplanned incident like we had, it creates a much more difficult environment to execute because there is no pre-planning. Our team has just distinguished themselves, and indeed we have confidence in the plan that we put forward, which is to commence startup during the month of December and be up and running in December.

Speaker #5: And as you said, I think they're very, very interested in getting the refinery back up and running. I have tremendous confidence in our team.

Speaker #5: They have done amazing work to get us to this point . It is a major lift . As Michael Bukowski can detail any project that a refinery does usually has years of advance work done , and when you have an unplanned incident like we had , it creates a much more difficult environment to execute because there is no pre-planning .

Speaker #5: And so our team is just distinguished themselves and indeed we have confidence in the plan that we put forward , which is to commence start up during the month of December and be up and running in December .

Speaker #5: Of course , that requires us doing everything as safely and reliably as we can . And if there's a moment in time where we need to take a breath or introduce a bit more time , there's always time for safety .

Matthew Lucey: Of course, that requires us doing everything as safely and reliably as we can. If there's a moment in time when we need to take a breath or introduce a bit more time, there's always time for safety. I have complete confidence in the team. We have all our permits in place, and I think we just need to let it play out over the next couple months.

Speaker #5: But I have complete confidence in the team . We have all our permits in place , and so I think we just need to let play out over the next couple of months .

Speaker #8: Perfect , sir . All the best for that . And I have come back to one of the comments you made on the call earlier where you said , look , the diffs really started to widen out towards the end of the quarter .

Manav Gupta: Perfect, sir. All the best for that. I have come back to one of the comments you made on the call earlier where you said, look, the diffs really started to widen out towards the end of the quarter. Just trying to understand the outlook for the heavy light differentials. I think we all acknowledge PBF is one of the most levered to that trend. If that diff does widen, it will lead to material increase in your capture rates. Help us understand what you're seeing out there. Are there heavier discounted barrels now showing up on the Gulf Coast, which was, or other parts of your system, which was not the case even two or three quarters ago? If you could help us talk through that. Thank you.

Speaker #8: So I'm just trying to understand the outlook for the heavy light differentials . I think we all acknowledge PBF is one of the most levered to that trend .

Speaker #8: If that diff does widen , it will lead to material increase in your capture rates . So help us understand what you're seeing out there .

Speaker #8: Are there heavier discounted barrels now showing up on the Gulf course , which was or other parts of your system which was not the case ?

Speaker #8: Even 2 or 3 quarters ago ? If you could help us talk through that . Thank you .

Speaker #5: Absolutely . I'm going to make a couple comments and turn it over to Tom . Look , the market has been constrained . If you go back , you know , starting over four years ago when barrels started getting pulled off the market .

Matthew Lucey: Absolutely. I'm going to make a couple comments and turn it over to Tom. Look, the market has been constrained. If you go back, you know, starting over four years ago when barrels started getting pulled off the market. When OPEC+ made its deliberate shift going back six months ago, there's simply a lag. Now, obviously they made their shift at a moment in time where you're going into peak runs and you're also going into crude burn in the Middle East. Demand is sort of at its highest. In any scenario there's going to be a lag. Considering the seasonal time that the tapering began, there was probably even more of a lag, one that was a bit frustrating to us. Indeed, we are now seeing crude loosen as a result of the OPEC+ moves. Tom?

Speaker #5: So when OPEC made its deliberate shift , going back six months ago , there's simply a lag . And now obviously they made their shift at a moment in time where you're going into peak runs and you're also going into crude burn in the Middle East .

Speaker #5: And so demand is sort of at its highest in any scenario . There's going to be a lag considering the seasonal time that the that the tapering began .

Speaker #5: There's probably even more of a lag , one that was a bit frustrating to us , but indeed we are now seeing crude loosen as a result of the OPEC moves .

Speaker #5: Tom .

Speaker #9: Yeah . Thanks , Manav . I mean , kind of just going a little bit further . I mean , I think Matt summarized that well in terms of the peak run environment and the crude burn , and obviously , you know , OPEC's pivoting in terms of where they've been in terms of their policies .

[Company Representative]: Yeah, thanks Manav. I mean, kind of just going a little bit further, I think Matt summarized that well in terms of the peak run environment and the crude burst, and obviously OPEC+ is pivoting in terms of where they've been in terms of their policies. That certainly has shifted the dynamics as we look at this year. This has been a year where crude stocks have been building, but they've been building in the non-OECD and the Western basin or the Atlantic Basin has been tight in comparison, stocks are low. We now have seen at this juncture, right, there's enormous amounts of oil that have been pushed out on water. Freight is very expensive. A lot of the oil going on water is clearly something related around some of the sanctions.

Speaker #9: You know , that's certainly has shifted the dynamics . You know , as we look at this year , right ? I mean , this has been a year where crude stocks have been been building , but they've been building in the .

Speaker #9: Non OECD and the Western Basin or the Atlantic basin has been , you know , tight in comparison . Right . You know , stocks are low .

Speaker #9: But we now have seen at this juncture right . You know there's enormous amounts of oil that have been pushed out on water .

Speaker #9: Freight is very expensive . A lot of the oil going on . Water is clearly something related around some of the sanctions . But inevitably that oil then needs to come back onshore .

[Company Representative]: Inevitably, that oil then needs to come back onshore, and when that comes onshore, that is a little bit more the sustaining aspect of what we've been seeing in the near term in terms of the widening of differentials because you got cheap tanks available in the U.S. Cushing and Pad 3 are certainly available to be built at far more economic numbers than putting it on a ship at multi-year highs in terms of freight. I think the last kind of couple comments in terms of barrels that were getting pulled out of the Atlantic Basin to the Pacific, particularly some LatAm barrels, we are seeing avails and we are buying barrels that we have not bought in several years, and that's coming into our system.

Speaker #9: And when that comes onshore , that sort of is a little bit more of the sustaining aspect of what we've been seeing in the near term in terms of , you know , the widening of differentials because you've got cheap , you got cheap tanks available in the US , you know , Cushing and Pad three are certainly available to be built .

Speaker #9: That far more economic numbers than putting it on a , on a ship at multi-year highs . In terms of freight . And then I think , you know , kind of a couple of comments in terms of barrels that were getting pulled out of the Atlantic basin to the Pacific and , you know , particularly some Latin barrels .

Speaker #9: I mean , we are seeing avails and we are buying barrels that we have not bought in several years . And that's coming into our system .

Speaker #9: And I think one of the larger things also to kind of comment is if we were talking about the market a year ago , we would have been talking about obviously the taper and all the different effects , but we would have been talking about underperformance in Brazil .

[Company Representative]: I think one of the larger things also to comment is if we were talking about the market a year ago, we would have been talking about obviously the taper and all the different effects, but we would have been talking about underperformance in Brazil. Guyana was just getting its sort of feet under itself. We've had prolific finds and gains in those areas that are certainly contributing to the dynamics where the crude market dynamics certainly look a little bit better and a lot better, excuse me, in terms of their availabilities, particularly to the coastal regions.

Speaker #9: Guyana was just getting its feet under itself . We've had prolific fines and gains in those areas that are certainly contributing to the dynamics where the crude markets are .

Speaker #9: Dynamics certainly look a little bit better and a lot better . Excuse me , in terms of their availabilities , you know , particularly to the coastal regions .

Speaker #8: Thank you so much .

Manav Gupta: Thank you so much.

Speaker #3: Thank you . Your next question comes from Ryan Todd from Piper Sandler . Please go ahead .

Operator: Thank you. Your next question comes from Ryan Todd from Piper Sandler. Please go ahead.

Speaker #10: Great . Thanks . Maybe I just might be hard to answer , but maybe it's great news on the approval of another $250 million installment of the insurance proceeds .

Ryan Todd: Great, thanks. Maybe this might be hard to answer, but maybe it's great news on the approval of another $250 million installment on the insurance proceeds. Is there a way to think about this from a timeline point of view in terms of what it covers or what is included in the installments up to this point? Does it cover costs and losses implied through year end under the current plan or through the end of third quarter? I guess as part of, like, how should we think about the, you know, the possibility of further meaningful installments in the future?

Speaker #10: Is there a way to think about this from a from a timeline point of view , in terms of what it covers or what is , you know , kind of what is included in the installments up to this point .

Speaker #10: Does it cover costs and losses implied through year end under the current plan or through the end of third quarter ? I guess it's part of like how how should we think about the , you know , the the possibility of further meaningful installments in the future ?

Speaker #11: Yeah . Happy to address that to some degree .

Matthew Lucey: Yeah, happy to address that. To some degree we don't want to get into the detailed accounting or the dissection of it. Here's how I would describe it. In the third quarter, we got a $250 million payment shortly after the quarter, so it wasn't in the results. If you look at the third quarter and you take credit for that $250 million that came in just after September 30, we're a little bit in arrears.

Speaker #5: We don't want we're not going to get into the detailed , you know , accounting or the dissection of it . Here's how I would describe it in the third quarter , we got $250 million .

Speaker #5: Payment shortly after the quarter . So it wasn't in the results . So if you look at the third quarter and you take credit for that , $250 million that came in just after September 30th , we're a little bit in arrears .

Speaker #5: So if you pull out more broadly and look at the third quarter and we had an asset sale of $175 million , and you take that out , but then you solve for the insurance payment that came in right after the quarter .

Matthew Lucey: If you pull out more broadly and look at the third quarter, and we had an asset sale of $175 million and you take that out, but then you solve for the insurance payment that came in right after the quarter and you account for us being in a bit of arrears in some insurance collections through the quarter, I look at our operations on a pro forma basis for Q3 as being cash flow positive to the tune of between $100 million and $200 million. In regards to going forward, all I can say is we've had a tremendous relationship with the insurance markets, with the underwriters. I don't know if that can always be said for other companies and other industries and other incidents. We've had a longstanding relationship with our insurance underwriters.

Speaker #5: And and you account for us being in a bit of arrears in some insurance collections . You know , through the quarter , I look at our operations on a pro forma basis for Q3 as being cash flow positive to the tune of , you know , between 100 and $200 million .

Speaker #5: In regards to going forward , all I can say is we've had a tremendous relationship with our with the insurance markets , with the underwriters .

Speaker #5: I don't know if that can always be said for other companies and other industries and other incidents , but we've had a long standing relationship with our insurance underwriters , our team .

Matthew Lucey: I was along with our team over in London meeting with the insurance markets over there. We hosted the group here in New Jersey for the U.S. underwriters, and we continue to really value the relationship we have with them. There will be some payments out in arrears, but it's very, very manageable.

Speaker #5: Was , along with our team over in London , meeting with the insurance markets over there . We hosted the group here in new Jersey for the US underwriters , and we continue to really value the relationship we have with them .

Speaker #5: There will be some payments that are in arrears , but it's it's very , very manageable .

Speaker #10: Okay . Thank you . That's that's helpful . Maybe one shifting to the RBI program . You've talked a little bit I'm , I'm not sure if I missed this , but can you maybe you know congratulations on the on the progress you've made up to this point .

Ryan Todd: Thank you, that's helpful. Maybe one shifting to the Refining Business Improvement (RBI) program. You've talked a little bit. I'm not sure if I missed this, but can you maybe, congratulations on the progress you've made up to this point. Can you provide a little more color on maybe how much you've been able to capture to date on your OpEx per barrel reduction targets or CapEx run rate targets? You know, what are the big buckets left to achieve as you work towards 2026, you know, kind of target completion on that plan.

Speaker #10: Can you provide a little more color on maybe how much you've been able to capture to date on your opex per barrel reduction targets or CapEx run rate targets ?

Speaker #10: You know , what are the big buckets left to achieve as you work towards a 2026 kind of target completion ? On on that plan ?

Speaker #6: Okay , so thanks for the question , Ryan . This is Mike . So as I said , we're on target for the 230 million , I think as of today , we're close to about $210 million of implemented savings on a run rate basis throughout the course of the year .

Michael Bukowski: Okay, so thanks for the question. Ryan, this is Mike. As I said, we're on target for the $230 million. I think as of today we're close to about $210 million of implemented savings on a run-rate basis throughout the course of the year. That's cash, so that's not just all OpEx. Roughly think about that, as I said before, 70% OpEx, 30% CapEx. We look real good to finish up the year to hit our goal of $230 million when we look across the system. Remember we just started this in two refineries back in January. There's kind of a time basis of this, but I think across the course of the year up to the third quarter probably captured order of magnitude about $30 to $40 million of OpEx and then another $10 to $15 million of turnaround savings.

Speaker #6: That that that's cash . So that's not just all opex . And so roughly , think about that . As I said before , 70% on OpEx , 30% CapEx .

Speaker #6: And so we look real good to finish up the year to to to hit our to hit our goal of $230 million . When we look across the system , remember , we've just started this in two refineries back in January .

Speaker #6: And so there's kind of a time basis of this . But I think it costs across the course of the year up to the third quarter , probably captured order of magnitude , about 30 to $40 million of opex .

Speaker #6: And then another 10 to $15 million of turnaround savings . And one thing you may want to take a look at in in our earnings release is the third quarter performance of the Delaware City Refinery .

Michael Bukowski: One thing you may want to take a look at in our earnings release is the third quarter performance of the Delaware City refinery. You'll see that in an area where we had some headwinds on energy prices, the utilization was about the same quarter to quarter and we're showing a reduction in OpEx. We're starting to see it get to the bottom line.

Speaker #6: You'll see that in a in a in an era where we had some headwinds on energy prices , the utilization was about the same quarter to quarter .

Speaker #6: And we're showing a reduction in opex . So we're starting to see it get to the bottom line .

Speaker #10: Do you think that there's a is there a another leg to this process as you think beyond the , you know , kind of the 2026 completion , now that you've , you've I mean , you're not that far into this process , is there is there kind of a second leg in tranche that might be visible at this point that it's more , you know , more , more upside in the future ?

Ryan Todd: Thanks. Do you think that there's another leg to this process as you think, beyond the 2026 completion now that you've, do you, I mean, you're not that far into this process. Is there kind of a second leg entrance that might be visible at this point? That's more, you know, more upside in the future?

Speaker #6: Yes , definitely . I tend not to think of this as legs or tranches . I tend to think of this as a continuous improvement journey that never really ends .

Michael Bukowski: Yes, definitely. I tend not to think of this as legs or tranches. I tend to think of this as a continuous improvement journey that never really ends. As I said in my prepared remarks, we added the other refineries in the third quarter to the program. Initially it was just Torrance and Delaware City, and then we're bringing on these other refineries. A large impact in that $210 million has been through the central and just those two refineries. Additional savings will be coming online from the refineries that we added to the program. The way we're doing this, this is not just deferring expenses. This is finding waste, driving efficiency, and eliminating cost.

Speaker #6: But as I said in the in the in my prepared remarks , we added the other refineries in the third quarter to the program .

Speaker #6: And so initially it was just targets in Delaware City. And then we're bringing on these other refineries. So a large impact in that $210 million has been through the central.

Speaker #6: And just those two refineries . So additional savings will be coming online from the refineries that we added to the to the program .

Speaker #6: And then the way we're doing this , this is a this is not just deferring expenses . This is finding ways driving efficiency and eliminating cost .

Speaker #6: And so we will spend the time next year going through another what we call brainstorming or ideation process . And all the facilities one , to ensure we sustain what we have , but also to drive improvement going forward .

Michael Bukowski: We will spend the time next year going through another, what we call, brainstorming or ideation process at all the facilities, one, to ensure we sustain what we have, but also to drive improvement going forward. As I look towards the end of 2026, I see that run-rate savings going up to over $350 million.

Speaker #6: So as I look towards the end of 2026 , I see run rates that run rate savings going up to over $350 million .

Speaker #10: Thank you .

Ryan Todd: Thank you.

Speaker #3: Thank you . Your next question comes from Doug Leggate from Wolfe Research .

Operator: Thank you. Your next question comes from Doug Legate from Wolfe Research.

Speaker #12: Okay . I'll take that . Good morning everybody . I wonder , if I could hit on the lower turnaround expenses . And I'm wondering , as part of your efficiency drive , do we basically get your reference Delaware and your remarks just there in the last question , do we think about higher utilization being a a new normal ?

Doug Leggate: Okay, I'll take that. Good morning everybody. I wonder, Matt, if I could hit on the lower turnaround expenses. I'm wondering, as part of your efficiency drive, do we basically get. You referenced Delaware in your remarks just there in the last question. Do we think about higher utilization being a new normal, I guess for PBF Energy going forward? It seems to us that the whole industry has managed to shift up its utilization. Obviously, that resets our view of mid cycle free cash flow. We're just wondering if that also applies to you guys.

Speaker #12: I guess for PBF going forward ? It seems to us that the whole industry is managed to shift up . Its utilization . Obviously , that resets our view of mid-cycle free cash flow .

Speaker #12: We're just wondering if that also applies to you guys .

Speaker #6: Yeah . We so our turnaround program is set up a couple different ways . You know , and in the past we haven't been happy with our performance on cost .

Michael Bukowski: Yeah. Our turnaround program is set up a couple different ways, you know, and in the past we haven't been happy with our performance on cost and schedule. We also have an opportunity to optimize our intervals. We think we'll see a lengthening of intervals for one thing, so that'll allow more runtime. We are working with a third party benchmarking firm to really set our turnaround budgets and schedules going forward. That's how we're going to drive the savings. We would expect to see somewhat shorter duration turnarounds and much more effective turnarounds, which ultimately will turn into higher utilization while the units are up.

Speaker #6: And schedule . And then also we have an opportunity to optimize our intervals . And so we think we'll see a lengthening of intervals .

Speaker #6: For one thing . So that'll allow more run time . We are working with a third party benchmarking firm to really set our turnaround budgets .

Speaker #6: And schedules going forward . And that's how we're going to drive the savings . And so we would expect to see somewhat shorter duration turnarounds and much more effective turnaround turnarounds , which which ultimately will turn into higher utilization .

Speaker #6: While the units are up .

Speaker #5: In regards to utilization broadly , I sort of think of it maybe in a simplified manner . I think you have a confluence of a number of events .

Matthew Lucey: In regards to utilization broadly, I sort of think of it maybe in a simple form. I think you have a confluence of a number of events. One is if you have a winterless winter or if you have a stormless summer, it certainly makes the operating environment easier to operate if you don't have disruptions. We've seen that over the last number of seasons where there's been minimal impact, whether from storms or from harsh winters. You have obviously some creep, whether it's capacity creep, debottlenecking, some increases in throughput, and so numerators may be a bit dated. You have this pursuit of operational excellence where everyone is trying to become more efficient and become the best operators they can. In so doing you're able to increase your reliability and increase your throughput. We are on that journey and we expect it to pay dividends for sure.

Speaker #5: One is if you have a winter this winter , or if you have a storm less summer , it certainly makes the operating environment easier to operate .

Speaker #5: If you don't have disruptions . And we've seen that a number of over the last number of seasons where there's been minimal impact , whether it's from storms or from harsh winters .

Speaker #5: And then you have obviously some creep , whether it's capacity creep , debottlenecking , you know , some increases in throughput . And so numerators may be a bit dated .

Speaker #5: And then you have this pursuit of operational excellence where everyone is trying to become more efficient and , and become , you know , the best operators they can .

Speaker #5: And in so doing , you're able to increase your reliability and increase your throughput . We are on that journey and we expect it to pay dividends for sure .

Speaker #12: Okay , that's it seems to be applying . I , observed Phillips and Valero that between them they replaced Lindell . Houston basically with utilization .

Doug Leggate: It seems to be applying. I observed to Phillips and Valero that between them they replaced Lyondell Houston basically with their better utilization. Anyway, I'm grateful for the input. Thank you. My follow-up, I will add my welcome to Joe and ask him maybe to earn his crust a little bit today. Joe, I don't know if this is something you can do, but if we try to simplify all the moving parts on the cost, the money going out the door for the repairs, the insurance proceeds coming in, obviously you took out the short-term loan to navigate through this. If we normalize the balance sheet when all is said and done, where do you think your net debt would sit? I'm not talking about contribution from future quarters and so on.

Speaker #12: But anyway , I grateful for the input . Thank you . My my follow up . I will add my welcome to Joe and ask him maybe to to earn his trust a little bit today .

Speaker #12: Joe I don't I don't know if this is something you can do , but if we tried to simplify all the moving parts on the cost , the money going out the door for the repairs , the insurance proceeds coming in , obviously you took out the short term loan to navigate through this .

Speaker #12: If we normalize the balance sheet , when all is said and done , where do you think your net debt would sit ? Not .

Speaker #12: I'm not talking about contribution from future quarters and so on . When you normalize for the money out and the money in , what would your net debt be if you hadn't had this event ?

Doug Leggate: When you normalize for the money out and the money in, what would your net debt be if you hadn't had this event?

Speaker #7: That's , you know , interesting . Obviously there would be a lot of different factors playing into the market . And how our results would be if the event didn't didn't happen .

Joe Marino: That's an interesting question. Obviously, there'd be a lot of different factors playing into the market and how our results would be if the event didn't happen. Part of the issuing of that additional, the additional notes earlier this year was, you know, in advance of the potential market that we were looking at at that point. Some of that was outside of purely just Martinez related. I think, you know, hard to specifically answer that question to it down to a fine detail, but it would be less than it is today, but probably more than, you know, from a net debt standpoint than entering the year.

Speaker #7: And part of the the issuing of that additional , the additional notes earlier this year was , you know , in advance of the potential market that we were looking at at that point .

Speaker #7: So some of that was outside of purely just Martinez related . So I think , you know , hard to specifically answer that question to down to a fine detail , but it would be less than it is today .

Speaker #7: But probably more than , you know , from a net debt standpoint than entering entering the year .

Speaker #12: Yeah , I know it's a tough one to answer . Just to clarify what I'm asking , I'm not looking for the lost opportunity cost .

Doug Leggate: Yeah, I know it's a tough one to answer. Just to clarify what I'm asking, I'm not looking for the lost opportunity cost. I'm looking for the extraordinary costs and the extraordinary cash inflows from insurance. If those were all taken out, is that a net debt lower number, or can you put a magnitude on it? No, we're just trying to figure out how much do we deduct from our DCF or net debt on a normalized basis.

Speaker #12: I'm looking for the extraordinary costs and the extraordinary cash inflows from insurance . If those were all taken out , is that a net debt , lower number or .

Speaker #12: Can you put a magnitude on it or . No . What you're trying to figure out how much do we deduct from our DCF .

Speaker #12: Net debt on a normalized basis .

Speaker #4: Yeah .

Joe Marino: Yeah, I'd say again it's hard to put a fine point on that. Obviously, the cost, as we've said before, of actual repair costs are going to be substantially covered by our insurance. That really won't have a meaningful impact on our overall net debt, whether you look at it on a pro forma or go forward basis. There's impact to the business and our net debt profile from the downtime for sure, and we think a good deal of that will be offset by BI insurance when everything is all said and done, but we don't have an exact impact of what that would look like at this point.

Speaker #7: I'd say again , it's hard to put a fine point on that . Obviously , the cost , as we've said before , of actual actual repair costs are going to be , you know , substantially covered by our insurance so that really won't have a meaningful impact on our overall net debt on a , you know , whether you look at it on a pro forma or go forward basis , there's no impact to the the business and our net debt profile from the downtime , for sure .

Speaker #7: And we think a good deal of that will be offset by , by by insurance . You know , when everything is all said and done .

Speaker #7: But to you know , we don't have , you know , an exact impact of what that would look like . You know , at this point .

Speaker #12: Yeah , I'll take it offline with Colin . Thanks so much , Joe . Thanks again .

Doug Leggate: Yeah, I'll take it offline with Colin. Thanks so much, Joe. Thanks again.

Speaker #3: Thank you . The next question comes from Neil Mehta from Goldman Sachs .

Operator: Thank you. The next question comes from Neil Mehta from Goldman Sachs.

Joe Marino: Yeah, good morning.

Doug Leggate: Good morning, Matt. Good morning, team. There's been a lot of talk about moving product into the West Coast as some of your competitors retire capacity with three independent projects talked about either into the Southwest or even into California. Just your perspective on whether that can alleviate some of the pressure on PADD 5 and how do you think about timing and potential impacts of that?

Matthew Lucey: Yeah, thanks Neil. Good to hear from you. In regards to some of the Nelson's project, I'm not going to speculate in regards to which, if any, are going to get to the finish line. I would just say in the base case, in the base case you're going to be very, very expensive. In the base case you're going to take a lot of time. As an observer of the market and as a participant in the market, my guess is that the base case may be aspirational in regards to time and money. I probably tend to take the over on time as nothing is as easy as a result, it's cousin money. I'd probably take the over regardless of how long it takes. There will be substantial tariffs on any new pipes that are built.

Matthew Lucey: We continue to think our in-state manufacturing facilities will be the low cost producer. The state is going to require imports whether it comes from the water or from pipe that will be higher priced imports. I think with the sort of rebalancing that has happened within California refining, we're very, very well positioned from a product standpoint but also from a crude standpoint. If you have one refinery just came down, one refinery is still scheduled to come down, you then also have less demand on local crudes as a result. I think our position in California is particularly attractive and interesting going forward, regardless of the potential pipes. When they come on, how they come on, they will be coming on because it's product short market.

Doug Leggate: All right, thanks Matt. Good color, then early thoughts on 2026 CapEx recognizing we're going to get a little bit more color in Q4 and you guys have done a good job keeping a lid on spend this year. How do you think about some of the moving pieces as you move into 2026, and is there a soft number that we should be thinking about penciling in, recognizing we're going to get a harder number on the Q4 call?

Matthew Lucey: Yeah, I would keep to our schedule on that. We do have a heavy turnaround season next year, but we'll get into that normal course, Neil.

Doug Leggate: Thanks ma'.

Matthew Lucey: Am.

Operator: Thank you. The next question comes from Philip Yangworth from BMO.

Doug Leggate: I was hoping you could just talk to what you're seeing this month in the SoCal market. Just given the moving pieces with Phillips LA closing down two weeks ago, are you seeing any benefit here? Obviously, we had the unplanned downtime which really helped jet along with other product prices.

I was hoping you could just talk to what you're you're you're seeing this month and and the SoCal Market just given the moving pieces with Phillips, La closing down uh, 2 weeks ago or are you seeing any benefit here? And obviously we had the unplanned downtime um which really helped get along with other product prices.

Joe Marino: It's hard to tell what the impact of Phillips is because there is a tremendous amount of unplanned outages that are going on currently. As you highlighted, the market's quite dynamic on everything gasoline, jet fuels, and diesel. Hard to judge as to what impact the overall markets have with just Phillips going down by itself. There's a fair amount of planned and unplanned events going on on the West Coast. It is what we call an all bid market.

Matthew Lucey: Yeah. In regards to just pulling yourself out of the prompt screen, it is hugely impactful. There's going to be 100,000 barrels a day less of gasoline produced in the LA region that now has to be imported from outside the state. Obviously, a significant amount of California crudes are no longer going to be procured by that refinery. Those crudes' only home is with California refineries. It will play out. The refinery literally shut, I think, two weeks ago, and there's been lots of activity in the marketplace not related to the shutdown. It's hard to unpack exactly, but over time I think our position in California will prove out to be pretty compelling.

Coast is 10 seconds. So it's, it is uh, what we call on all bid Market.

yeah, in regards to, you know, just pulling yourself out of like the The Prompt screen

Um, it is hugely impactful. There's going to be a 100,000 barrels, a day, less of gasoline, produced in the LA region that now has to be imported from outside the state. Um, and, uh, obviously, uh, a significant amount of California Crews, uh, are no longer going to be cured by that Refinery. Uh, and those Crews, uh, only home is with California refineries. So, you know, it will play out it the, the refinery literally shut. I, I think, 2 weeks ago, uh, and and there's been a lot of sort of activity in the marketplace. Uh, not not not related to the shutdown so hard to unpack. Exactly. But over time, uh, I think, you know, our position in California, will prove out to be pretty compelling.

Doug Leggate: Okay, great. With California now at least trying to stem the decline of local crude production, issuing permits, how optimistic are you that this could be a benefit to PBF Energy and in-state refiners or at least no longer a headwind with declining production?

Matthew Lucey: Yeah, my old joke is, you know, as a refining business we're all big boys and we generally we don't ask for help. You simply ask, stop bashing us in the head with a shovel. Systematically shutting in crude production was a significant headwind. I think with all that's going on in California, there's a recognition that that wasn't the single greatest policy to have in place and fixes have been put in place. I think it's a removal of a headwind. It will allow certainly the valley in California to stem declines. My other thing is, you find yourself in a hole, the first thing you do is stop digging. Hopefully we can have declines, you know, arrested. Whether the valley grows, I can't comment on, but simply is a very, very positive step to get that legislation through.

Okay, great. And with California, now at least trying to stem the decline of local crude production issuing permits. Um, how optimistic are you that this could get benefit to PBF and and in-state refiners, uh, or at least no longer a headwind. Um, with declining production

Yeah so my my old joke is you know, as a refining business we're all big boys and we we generally we don't ask for help, we simply asked uh stop bashing Us in the head with a a shovel. Uh and so you know systemically shutting in crude production. Uh was a significant headwind.

um, I think with all that's going on in California, there's a recognition that that wasn't the single greatest uh,

Policy, you have in place and fixes have been put in place, so I think the it's a removal of a headwind. It will allow uh certainly The Valley in California to stem declines. Um and so my other thing is you find yourself on hold the first thing you do is stop digging. So hopefully we can have declines, you know arrested, uh, whether the valley grows

I can't comment on and, and but simply, um,

Matthew Lucey: We work very, very closely with all the parties in Sacramento. It is hugely beneficial to have it in place because the alternative was very poor. Our team has worked unbelievably and has worked in concert with a number of the constituents in Sacramento, whether it's the CEC, the governor's office, with legislators. I think everyone appreciates the importance of supplying reliable, deliverable, affordable energy to the people of California. They desperately need gasoline and diesel and jet fuel at affordable prices.

Is a very, very positive step, uh, to to get that legislation through. We work very, very closely, uh, with all the parties in Sacramento. Uh, it is hugely beneficial to have it in place, uh, because the alternative was very poor. Um, and so the the our team

Has worked.

Unbelievably, uh, uh, and has worked in concert, uh, with a number of the constituents in in Sacramento, whether it's the CEC, the governor's office with legislators, I think everyone appreciates the importance of supplying reliable deliverable affordable energy to the people of California. And they desperately need uh gasoline and Diesel and jet fuel at affordable prices.

Doug Leggate: Thanks.

Thanks.

Operator: The next question comes from Matthew Blair from Piper Sandler.

The next question comes from Matthew, Blair, from PPH.

Matthew Blair: Thank you and good morning everyone. Could you talk about your outlook for refining capture in the fourth quarter? It seems like it could take a big step up. I think you already mentioned that crude differentials are trending a little bit wider, but it seems like other factors might be moving in your favor. Less maintenance, less turnaround expense, better market structure, better jet versus diesel spreads, lower RINs. I mean, pretty much everything across the board seems to be moving in your favor. I think you're in the mid 30% range on capture in Q3. Do you think something north of 40% is realistic for the fourth quarter?

Matthew Lucey: We agree with everything you said. Bring it on staff. Look, I think it's very constructive. Look ahead. Crude disk is the single largest thing, there's no question about it. I think they're set to continually improve over the quarter. RINs is a tough one in regards to. They have been relatively stable in regards to RIN prices. RIN prices are eventually going to have to move up, but of course that goes to the cost to import as well. If you look at the marketplace at the moment, it's pretty interesting. European gasoline is pricing higher than the U.S. not only for today, but out on the strip. That's true for Asia as well. It sets up a constructive environment.

Uh, thank you and good morning, everyone. Uh, could you talk about your outlook for refining, capture in the fourth quarter? It seems like it could take a big step up. I think you already mentioned that 2 districts are trending a little bit wider, but, you know, it seems like other factors might be moving in your favor. You know, less, uh, less maintenance less turnaround expense, uh, better Market structure better jet versus diesel spreads lower rims. I mean, pretty much everything across. The board seems to be moving in your favor. Um, I think you're in the mid 30% range on capture and Q3, do you think something north of 40% is realistic for the fourth quarter?

We agree with everything you said.

Bringing on staff. Uh, look. I think it. It's very constructive. Uh, look ahead crew desk is a single largest thing. Uh, there's no question about it.

Uh, and I think there's, there's, there's set to continually improve over the quarter. Um,

Wins. Um, wins is a tough 1 uh, in regards to they have

They have been relatively stable in regards to rent prices rent. Prices are eventually going to have to move up.

The cost import uh, as well. And if you look at the marketplace at the moment, it's pretty interesting.

European gasoline is pricing higher than the US.

Not only for today, but out on the strip.

Um, and that's true for Asia as well.

And so it it sets up a constructive.

Matthew Lucey: Whereas either European prices have to come down and we don't see that in the short term, or North America Atlantic Basin PADD 1 prices have to increase to attract those imports. Everything he said we agree with in regards to improved marketplace.

Uh, environment.

whereas um,

Either.

European prices have to come down and we don't see that in the short term.

Or North America, Atlantic Basin. You know, had 1 prices have to to increase to attract those Imports. But everything he said, uh, we agree with in regards to improved Marketplace.

Matthew Blair: Sounds good. Earlier you mentioned some of the challenges in the renewable diesel space. One of your competitors just threw in the towel on RD. Do you have any thoughts to shutting down your RD plant or what's the—

Matthew Lucey: Thinking there, our thinking is that it has been a challenging market. Unlike others, we view our asset as a top quartile asset. I think there's a lot to juggle in regards to renewable diesel. You've had an administration change where the whole focus of the program has shifted from a low carbon intensity incentive to reduce low carbon fuels to the new administration, which is really focused on increasing soybean production and use. That change is more than a subtle one, and it's going to put a number of assets in a pickle. You couple that with the new rules where imported feeds have a penalty, imported renewable diesel doesn't get the producer's tax credit. There's a lot to play out in it. Much of it points most likely to higher RIN prices.

Sounds good and then earlier you mentioned some of the challenges in the renewable diesel space. Um, you know, 1 of your competitors just threw in the towel on RV. Do you have any any thoughts to? Uh, shutting down your Rd plant? Or what what's the the thinking there?

Our our thinking, uh, is that it is been a challenging Market.

But unlike others, um, we view our asset as a top cortile asset.

And um, you know, I think there's a lot to juggle uh, in regards to Rd. Uh, and you've had Administration change where the whole focus of the program has shifted from, uh, a low carbon.

Intensity, uh, incentive to reduce low carbon fuels.

to the new Administration, which is really uh, focused on increasing uh,

Soybean, uh, production and and use. Um,

That change is more than a subtle 1, and it's going to put a number of assets.

in a pickle and the and he coupled that with the new rules, where, you know, imported feeds, uh, are

Have a penalty imported Rd. Doesn't get the producers tax credit.

Matthew Lucey: By the way, higher RIN prices not only because you need to create an environment that makes it economic to manufacture renewable diesel, but also as supply comes off, you have an RVO that's not going to decline. I do think RIN prices, there's a risk for higher RIN prices, and hopefully the administration understands that. They're taking comment now on reallocation and such. Where we sit, it has no doubt been a very difficult market, but our location and the capabilities that we have at our plant I think set us apart from a number of the other participants.

There's a lot to play out uh, and it much of it points most likely to higher rent prices. And by the way, higher rent prices is not only because you need to create an environment that makes it economic to manufacture renewable diesel. But also as Supply comes off, you have an rvo. That's going to you know, that's not going to decline.

And so, you know, I do think when prices there's a rest for a higher rent prices and hopefully the administration understands that they're taking comment now, uh, on on the allocation and such. Um, but you know where we sit, um, is no doubt that a very difficult Market, but our location and the capabilities that we have at our plant. I think sets us apart from another uh, a number of the other. Participants

Matthew Blair: Great, thanks for your comments.

Great, thanks for your comments.

Operator: Thank you. Your final question comes from Conor Fitzpatrick from PBF Energy. Please go ahead.

Thank you.

Your final question comes from Connor Fitzpatrick from p.

Matthew Lucey: I'm not sure.

BF. Please go ahead.

Ryan Todd: Hi. Sorry, it might have been a mix up there. Good morning. Thanks for taking my questions. I apologize if some of this has been touched on before, but we're hearing that the vessels that need to be installed at Martinez have a 60 day time frame to install and construct. Have those arrived at the Martinez site yet? We think they also need to be inspected and blessed by Bay Area Air Quality Management, EPA, and OSHA. Can federal sign off be done during the government shutdown? I know you mentioned permitting before, but should there be any further issues as it relates to shutdown and oversight, and I guess more broadly, can you break down the timeline of equipment left to be received, received authority to construct, and shutdown impacts on that, and time to place all the equipment into service? Thanks.

Hi.

Good morning. Thanks for taking my questions. Um, I apologize if some of this has been touched on before, but we're hearing that the vessels that need to be installed at Martinez, have a 60-day time frame to install and construct. Um, have those been arrived. Have have those arrived at the Martinez site yet. And uh, we think they also need to be inspected and blessed by Bay Area. Air quality management EPA and OSHA can Federal sign off be done during the government shutdown. I know you mentioned, uh, uh permitting before but, but should there be any further issues as it relates to?

Shut down and, uh, oversight. And I guess more broadly, can you break down the timeline of equipment left to be received authority to construct and shut and uh, shut down? Impacts on that and time to place all the equipment into service.

Matthew Lucey: All right. Okay. I'm aware maybe there was some fake news or stories. I would suggest everyone focus on what the company's official comments are. I'm not entirely sure where you're getting some of your information. As I said, we have all of our permits to construct. We have a very good relationship with not only the state but with the county in regards to get us to the finish line. We have our plan again to commence restart in December, which takes into consideration everything that is required. We're certainly not going to get into explicit details, despite you being announced as a PBF person, you're not a PBF employee. We're not going to get into explicit details on exactly what equipment is being restarted when, but we have a very thoughtful and deliberate plan to restart the equipment and we'll have all the approvals necessary to do that.

Thanks. All right. Uh, look, I I'm aware maybe there was some fake news or stories. I I, I would suggest everyone uh,

Construct. Uh, we have a

very good relationship with not only the state, but with the county in regards, uh, to get us to the finish line and we have our plan, uh, again to commence restart in December, uh, which takes into consideration, everything that is required. Uh, we're certainly not going to get into explicit details, despite you being in house as a PBF person? Not a PBF, a boy. Uh, uh, you were not going to get into explicit details, uh, on exactly what equipment is being restarted when. But, uh, we have our very, uh, thoughtful and deliberate plan, uh, to restart the equipment and we'll have all the the approvals necessary to do that.

Ryan Todd: Thanks. That's very clear. I guess I should correct and say that I'm from Bank of America. I think there was, if you couldn't tell, I don't know, but thank you. That's the only question I had.

Matthew Lucey: I appreciate the question and hopefully there shouldn't be any confusion in regards to it. As Mike stated, we'll always make time for safety, but we've got a very, very good plan to get the plan up and running with that. I believe that concludes our questions. I greatly appreciate everyone's time and attention and look forward to very constructive markets. Looking forward. Thank you.

Thanks. That's that's very clear. Uh I guess I should correct and say that I'm from Bank of America. I think there was an access if you couldn't tell. I I I don't know but but uh thank you. That's the only question I had

Well, I appreciate the question. Um, and hopefully it

there. There shouldn't be any confusion, uh, in regards to it, uh, and as Mike stated, we'll always make time for safety, but we've got a very, very good plan to get the plan, uh, up and running. Um,

With that. Is that the complete our I believe that concludes our questions. Um so I greatly appreciate everyone's time uh and attention and look forward to uh very constructive markets looking forward. Thank you.

Operator: This concludes today's conference. You may now disconnect your lines at this time. Thank you for your participation.

This concludes today's conference, you may now disconnect your lines at this time. Thank you for your participation.