PBF Energy (PBF) 1 Aug 192019 Q2 Earnings call transcript

Company Profile

Participants

Colin Murray	Senior Director, IR
Matthew Lucey	President
Thomas O'Connor	SVP, Commercial
Erik Young	SVP & CFO
Thomas Nimbley	CEO & Chairman
Prashant Rao	Citigroup
Roger Read	Wells Fargo Securities
Justin Jenkins	Raymond James & Associates
Neil Mehta	Goldman Sachs Group
Paul Cheng	Barclays Bank
Matthew Blair	Tudor, Pickering, Holt & Co.
Patrick Flam	Piper Jaffray Companies
Jason Gabelman	Cowen and Company

Call transcript

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Operator

Welcome to the PBF Logistics Second Quarter 2019 Earnings Conference Call and Webcast. [Operator Instructions]. It is now my pleasure to turn the floor to Colin Murray of Investor Relations. Please go ahead.

Colin Murray

Thank you, Bree. to Energy welcome call. and morning, today's earnings PBF Good Officer; CEO; Tom our Tom With members Commercial are team. our our O'Connor, several Matt management of Chief CFO; me today our Nimbley, Lucey, other Young, President; our and Erik release, today's on supplemental information, A our earnings is website. copy including of available

to call statements direct and Before today's of summary, under the In press to to filings with express future contained the we safe release be are your cause which are covered that laws. from SEC. press securities the to the in started, this forward-looking many provisions or those getting or like statements harbor company's the on our harbor results release. it in attention that including predictions could intended I'd actual management's described safe statement in the our There factors outlines by federal differ contained expectations expectations,

quarters, million share. decreased results net prior adjustment, our which and we our discuss lower our market LCM or per earnings noncash with cost income after-tax Consistent or will $XXX reported a excluding of

As describing noted and operating press in results. be financial PBF's performance non-GAAP measures we using will certain our while release,

refer the press non-GAAP to of figure, in For reconciliations the provided appropriate release. GAAP tables measures to supplemental please today's

I will Tom to now turn the Nimbley. call over

Thomas Nimbley

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

the operational improved which from on operational regions strong some first West quarter, Coast, Coast. our in Our headwinds and refining solid boosted Mid-continent Coast quarter performance results margins. the and second Gulf refineries Product versus reflect our all East margins

are limiting of put market. currently on sanctions being on for barrels heavy differentials, heavy narrow economic we the cuts, medium navigate rewarded not refineries pressure the Venezuela Alberta OPEC to and and continue We the complex as has ongoing light through and complexity. on This supply Iran curtailment available the

of the do will the believe rewarded on slates Gulf that lightening backs responded East our the be and X implementation on have Tier We complexity our by gasoline. and upcoming up IMO Coast. We

speak, differentials. medium XXXX, and to activity our approach be line does slate result It crude in regards situation In light-heavy crude that X, IMO, believe will that refiners view shift to event more in a the the We and a to expect heavy oil, complexity we and for significant stop we fuel develop between as find need both in sand. lighter fourth January to differential IMO quarter, This put a home. producing is effort see we to a and the crudes. will in even continues products the to sweeter will an low low-sulfur struggle high-sulfur an which to and will expansion as

see refiners. in least this We to shift. believe at be this could alone, and shift estimate flexibility and multiples potentially of slates in the million X for the crude We we a of the be number. benefit lightening less are situated Atlantic complexity ideally Basin have complex PBF's per from refineries to number barrels that could and that day

fuels be for lighter an levels running X in tight to tight gasoline to Octane we we being such octane producing recently the going globally. Tier the the that particularly struggling crude, as shifts forward with oil which pool even gasoline. excess naphtha industry as home a fact an to impact to find seeing very will as refineries have area lower-sulfur seen monitor is market cleaner shifted crudes, of One is the light are

all this on well market, As assets a produce X company, capitalize positioned to and Tier our can is gasoline. of PBF

months. the It will over be the how X interesting to develops landscape see next

manner advantage of run an is which our improving to said market. still consensus growth in in I've of responsible market opportunities safely, best profitability many demand assets revised from intend will for half and the lead initial been oil We way XXXX operating reliably, half is in take data environmentally oil to second forecast, have first our prepared assets calling Although lower to be times XXXX. has the and to strong demand well. will the to

Now I'll to for call our turn Erik the go over over quarter. the to results financial

Erik Young

income you, Thank an adjusted second reported PBF Today, Tom. $X.XX quarter per share. of

Second EBITDA comparable and $XXX to approximately $XXX adjusted approximately quarter EBITDA consensus million was estimates was million.

million expect quarter of million range. results million prevailing year we in included at the $XX pricing, RIN full Our RIN-related $XXX and obligations, to expenses XXXX second $XXX

incurred the approximately for $XXX for million, CapEx refining PBF $X includes quarter and million by was $XXX and which million Consolidated Logistics. CapEx corporate

XX% of CapEx represents our refining million $XXX and, of completion roughly all million major maintenance XXXX. of $XXX full $XXX year activity turnaround million half the our importantly, first Our of for and approximately to guidance of includes

We pipeline net Valley from $X the the our And of $XXX ended million PBF billion of proceeds drop-down with million repayment. at These debt billion million was the Torrance liquidity, debt-to-cap at with and $X.X approximately $XXX $XXX and figures include Energy the in PBF Logistics. a quarter XX%.

As forward back generate the to of a and of capital working half normalization free flow strong expect our we cash significant low year, result to first half CapEx following we as look of builds. the the cracks, relatively

dividend of pleased announce share. per has are we a that Finally, $X.XX our to approved Board quarterly

over Now to I'll call turn the Matt.

Matthew Lucey

Erik. you, Thank

of XXX,XXX barrels throughput day. delivered assets Our approximately per

to conditions, during work the ran well turnaround were and at the Delaware Coast. the on in extended on of especially and exception able Mid-con our we favorable the assets the West capitalize With quarter, City, market

Paulsboro. we work the planned finished On Coast, and at Delaware both East

Delaware ran days XX unplanned The some on we as approximately coker fluid encountered turnaround long the work.

quarter. in to limited coker As just a days result, second availability XX the was

quarter, run Looking X-year the unit. that we forward, a with achieve completed to during are all expecting work and the was

complete. planned of maintenance for XXXX our now As is mentioned, major Erik XXX%

the clear have a rate for assets Our operational the remainder of run year.

the strategic and hydrogen quarter, We of in Delaware are be expect City plant coker projects progressing to schedule, XXXX. the on should in service are and second service with the the the plant. to Chalmette and our quarter hydrogen coker in in Both investments we late be fourth during

closely provide information requested to of acquisition we Shell the will receive to We are the parties. the the end did Martinez. by with appropriate second the approval, work a from the of request year. all anticipate on working Pending transaction close continue regulatory FTC and We the to

of Lastly, PES. on asset very approximately tighten. of be, about Europe, ultimately outage and the market to have day impacts It come from is pipeline East with likely Coast barrels refinery suppliers per X, we be filled near-term state which the PES that PADD traditional clean dynamics might the have to of supplied the premium Coast a to XXX,XXX Colonial been still imports product-short shifted day for the East hole seen will of definitively in XX,XXX barrels the is early have The a the gasoline. that the what There products market. outcome but including are from

With and East X more are other this to benefit to to the outage, refiners. provide PADD barrels Coast, a base transportation PBF attracted to going have should the be and

can with the to put believe We our focused strategic for position on business the move maintenance of remain system half decision intently first of into the control. a beneficial our the have second year. we half we in And we aspects our our of that XXXX,

We're pleased to remarks. opening take our that's Operator, questions.

Operator

our first [Operator will question from with go we to Instructions]. Prashant Citigroup. Rao And

Prashant Rao

you light, barrel availability crude availability here sort talked of and -- get lack basics the wanted to or of to and slates about, that medium on availability heavy sorry, I Tom. heavy the

of cadence I seeing back of the market to what waterborne. in look the the for then terms As half you the year, you're get to Canadian barrels wanted you generally on and sense expect a of of what

optimize second of the of able to I part sort Gulf, then And the question the noticed, somewhat. in you were is

You're getting barrels, I some you think, I medium running than than expected to. and light than our our -- more more expectations less would've

to slate. to those there get medium from. a for instances? really it light barrels the sort not necessarily sweet in are of substitute of And on tactical good are So barrels sense where Wanted looks you some crude opportunities there these coming like work of have

Thomas Nimbley

I we'll beginning the answer. take this think piggyback it. of I'll

said, is is, a Denial the opportunity. an In well of market it's is happen. in is IMO as the for to you're aware oil, I going terms still we the as a conundrum that -- think fuel that going they for there's for and of kind to -- reality heavy not think that up acceptable constraints oil. But the can as pushed have i.e., they as a diffs to continue product making long they're been fuel back to as changes X.X% incentive be the is imposed start market and that producing, tightened -- have

will going in So really see, system start Tom on some a starting you're are add X.X% the clean-dirty be light. XX over to days see decrease albeit a get see we quarter, to a moment riding and ask harbor, pricing, XXXX, New XX of in -- think to as expect, turning the O'Connor oil dollars into movement it's start at this, And going to that fuel lead, widening, some in heavy movement X, others on to take we probably opined spread barrel. York oil relatively heavy spreads. we to that on have lag ultimately, effect. I'll to But with you first, go a ultimately a a I in as fuel fourth to couple to We the ready a movement, to to where to light/heavy and start January further

constraints obviously Canada putting or that regards the on. is specifics, -- to As increasing slowly they're decreasing

the prices in frankly, we widen have by that more with rail significantly not But WTI, out. breakeven. come to have Canadian economic, economic some We movement, seen or -- see is that although, Brent still expect

is To have. and your a system point, the this, -- again, benefit though we of

a half refiner to crude. Delaware been light are has heavy -- our very a City in slate sweet a runs are We day Over crude. complex Toledo sweet barrels light we of moved refiner. of XXX,XXX

You're moving. right, barrels light we're moved on up we've how Chalmette much

believe around. on the cusp that some seeing course, we Mars/LLS has have you do we're add? do anything differential do would of And have that. we Tom, situation frankly, turn flexibility that more, you incented Of but to the

Thomas O'Connor

terms I the think second quarter did probably that XXXX. mean, thing would I the we for crude us rail it for I sounds add, in of by the only really trough represents -- --

was heavy So me, you in terms of taken -- the quarter. excuse expanse first higher trough that from the volumes we've was the in certainly that higher some quarter second Canada than in see

crude to for forward greater light some point, crude third we're for shift the quite that that you already sweet as shifts of we've anticipated quarter in ultimately, push to that even further a particularly, see, going already take looking some move So the time, shifts point, place is offshore back narrow quarter, at And when mediums -- expected demand in to -- that's world have think starting market I ultimately and lot one a -- to crude IMO, for second, taken place. right? have out U.S. the to will this and now back been and fourth slate at the that ultimately and look

Prashant Rao

operators sense your octane view supply be would to kind very you octane like in some to for talked that you -- -- I tight get might there. comments a from the is we're if market. detailed to X tightening Tier I Thank U.S.? that from of market's of gasoline trying much from yourselves, going or wanted standards incremental shift the Asia? think, imported it where in question, perhaps of the Okay. from and A your to the all come about Europe the where answer Is

shaping back haven't about that There's of to talked last in much source where -- octane sort U.S. get? how the refining Wondering could could a quarters And you it's up of you the -- few octane it's up. And incremental months add system capacity. you to LP but tight see on how from? issues, coming where gasoline X sort so also, and the burner the few to relative because market which get been go. X other I the can But soon, about Tier -- projects think coming

Thomas Nimbley

have trade-offs, is Yes. I'd since thought large, that fact was longer the preface by the on first the shift to ability let credits. I change companies It's X January buying going to had is, And investment to around say going capital the the XXXX, game good and this in paradigm will think fact to we've that regard, make ready economic no gasoline. -- through and credits some. on have or Tier XXXX, that and X, been is managed when me be decisions the for purchase industry there a you by X Tier

you is who said, large, and And reasonably refiner sweet here would the particularly shape. by the now good I I who medium two are is oil. is now possible wind a So shale that fit the even light is a -- oil with runs of out. in things you point your I think, up crude capacity, a up that units distillation and it naphtha impact as sweet industry One increased or it's if reformers There's and, refiner of into you you light coming to the trying shale surplus reforming light high-octane finished the slate running gasoline. of lighten own out into wind and trying very or that up crude, naphtha turn can't that your

in situation we to that where We of that And Chalmette, that, units, finished point we marketplace, from now, of and naphtha I'll that Chalmette. the did a higher we parcel own on might would that the own slate, project, and have units on of We our and what units, have know be a indigenous were. had is gasoline. a because had you of reformer We've position bought -- a naphtha when and light-ends into have of selling around that surplus recall, But a out actually of they of up joint percentage not hydrotreater, headwind naphtha number would the done capture taken reasons. shut would venture a economics things advantage taking rate. produce block a Chalmette plant. started naphtha having indigenous buying as it of in one turn that those turned instead that so first the We've we that naphtha we our been product was actually down a crude ExxonMobil/PDVSA whatever in a production,

add question Valero day guess That's that your make ways I a a frankly, and other unit. started player well, As you make XX,XXX octane, it this. another Appalachian There's to just on can to octane. reformer increase Obviously that can barrels severity up going you -- was on some octane.

EXX. very a especially if pool, short, ethanol as it's can then octane As you bring be an gets the into player it

to position a is now was right is in Coast of Our part is, a is producer octane. pretty stronger is the and big while going strong East transitory those -- reason octane be octane of of the PES and lot

I but complexity to advantage of okay. mean And we strong, of is our think, octane fundamentally, be going going market the it's So for more supplied. again, be the it's -- to will because be system. us

Operator

Roger with from Wells come Fargo. will question next Our Read

Roger Read

against a any on or would higher more terms second of discussion. in we cash et the little we this from we could, Erik, if flow back the Can half should I in maybe on accelerated CapEx, mean, the, half coming back maybe expecting through working think to and the granularity year, a capital backdrop. year, risks of pace the coming in us everybody you better be being of CapEx lower you cetera, operations with hopefully, Martinez knew kind give I that have acquisition in the maintenance, the tough. operating of recovery what anticipate? But

Erik Young

Yes.

-- things. order. start reverse of go ultimately kind think, We'll working the capital with let's side I in of

shy but we date, just back working is relates to portion we're capital see of other had to swing use other on a a portion just $XXX start related that of also probably believe of do the of to categories to of handful to that We So way. the A sheet. a balance million now. going it inventory, of

you a in so of included see numbers balance quarter snapshot sheet that's the second our reported tearsheets. just we Obviously, kind of the

already a now. started sit as of see come end have here we we through of the Ultimately, portion back that to July

associated is the online. Ultimately, a loaded relates intermediates. our refining we've intermediates perspective kind perspective. We're CapEx prior -- back where and ultimately, We're to the then, the those from them in seen storing CapEx similar with from we've to running refineries. building more as been units this so what And downtime front-end years, of and off come

So are. that effects said, of back to some the quarter. see capital follow-on we hydrocarbon Then swing of that, positive really should where the is end the this first subject the That of working to be prices towards start all to during be year. back part will there being should third

prices, a we back. massive So that in working spike coming does see some blunt if capital hydrocarbon it of

to Then maintenance with with bulk major CapEx to left of completion the CapEx, City. -- working at I'm XXX% essentially activity, spent of associated be the remainder and project the with Delaware the project sorry, really our of respect all hydrogen coker vast and the so year respect through through the tie-ins we're to relates the to the of of doing

with hodgepodge confident our smaller still know from X $XX So other there. guidance. each a included there's of we're We activities at going in our But very there's that are perspective, a band much that refineries. of million on

in as give close think middle to we sit think to wind we're XXXX. that the by the the decide CapEx going of chance, little band, event here that it make probably sense of cushion prefund during way; stuff XXXX to want bit that do basically I a today, along to some ourselves of little a may something bit up we spend I unforeseen to but happens if somewhere we,

have conjunction the use the a the accessing latter and the feel Martinez, through half a we the obviously use Valley across pipeline from -- the debt will the We back think really at announcement, in be to pretty the to at that We and generate year, appropriate of transaction today, good on paying And of ABL. by we the significant partially drop. balance down end Torrance fund expect we've the markets ultimately, we're in driven lot the flow, we capital June, with were here year. like board. million I of free increased our position cracks X in cash I that think associated outstanding we perspective -- we'll sit So balance during to We talked working do Martinez. time we're successful $XXX so security, quarter, where ultimately, the with going we did particular that in

Roger Read

still fund And side the Okay. the comfortable equity to not transaction? using

Erik Young

As the pretty control. the thought to good things that sit runway. for between we're type as look the of the we generate cash we we sit close, Clearly, flow that is changes of cannot unless forward time at think we today, of here now market all and a of capable today, here really we've the whims got us reasonable looking we But to producing. this something subject curves,

Roger Read

just Best results on step it. And from seen owned go side. to we've down since market quarter. the Okay. the to favorable one in the California Obviously, position just more start wondering. then I was Torrance you've pretty was

it XX could from the perspective, better? we have should kind that at Were your Just great. of a scale X, well did for a From performance there or X of outside, as think was if operate things as rating XX it it it's a it Looking have? were been X, an a you the QX? to in X, it, on X a kind

Thomas Nimbley

the Roger, us That's I have there an some well mean point. to in nature do refineries, very know, And this times and of the certain an X. the by them your problems them -- run probably, where give you a tight what they reliably, you -- position did. great question, because plant or is actually you give It's what supply a to want I'll be production shutdowns. chain I'd And island-ized is why to of a short equipment because is circumstances, California on are X, you products, as give an you go extent. that given right the of and X the say buy that is

But fast let's to have and we acquisition go. Torrance the or have, so of the we XX X to far proud ran since But still acquisition. -- the very so out well I'm -- to there organization. say, made did they very reliably. X.X took moved XX

We are That more has place yet. not there potential.

later. there. But margin environment, benefit yet. very said, And well, there prove great think, the not with to all Martinez. We'll second good so we a as a do but ourselves quarter in still have work we'll And out we're I way we've

Operator

Jenkins Justin Raymond Our will come from next James. with question

Justin Jenkins

or the demand guess the I'll half of is second the recently macro noticed or start better whether here outlook the half. Tom, portfolio shifts mentioned, market the that picture, on you of terms you side. the even you're Have I in system, in demand than board of XQ? that it's seeing environment across kind first throughout your seemingly From any XQ

Thomas Nimbley

go that and quarter. dead because first we will XQ, environment efficient. obviously, a and arrival recovered, are again, continue say, to was the of declared situation, And they be and during the markets which, I'd combustion that. rocky to internal predicted the we the was We back gasoline efficient, engine on

that A in little rains to a in bit the to impacted it a -- in was and the certainly and extent, probably of lull diesel and agricultural was heavy quarter, flooding extent, usage. certain certain second impacted, by decrease

to in we oil coker terms what looked has others at by that is big because happen the it unless will high-sulfur view X. feedstocks we you see ground compliance the move good a thought big especially into And put view But you IMO, would own away -- first in it in of for create it ULSD. all the we barrel is along if are you VGO can as going pool. your we that from just some is going or into also have. FCC cracks we boom coming on be as reasonably gas year. that to buy it's the a -- gas -- a additional crude We January be ability and expect way that -- if our put make market, diesel on from selling the as It's fuel a a Is the low an when morphed, push a our of half obviously IMO producer with to -- fuel you're IMO second even A, about the of, impact thought taking

you knobs out, all that of think -- constructive we there's But will that Tom, and demand the by do And so gas the see play knob clean different a and to just between you large, will going turn. add? we oils a would have market. basically anything products be

Thomas O'Connor

of inventory to distillate Yes. still adding on we're X seeing Tom, comfortable And clearly, but inventory, to be side year-on-year, has coming needs that. would mean, in I build that in I at years. is the this distillate the it I demand add IMO room the point of from with relative to increases -- increased that quite in barrel will is that front think equation.

Justin Jenkins

Perfect. the a outlook question shifting throughput like mentioned? the Chalmette. little guidance Or It Is is for I anything crude guess second operations here on lower of at sequentially. the you bit is of that of seems XQ to the that in note slate Chalmette? the terms kind outlook

Thomas Nimbley

taking Yes. heavy not don't the one, vice before. you said or There's on. turn switch I've versa, you've a built to make and same. it really the two dictate get that same the things, this into and hit economics light When They're machine capacity. and a machine run

differential LLS other LLS to one You economics turn and it that of Mars, heavy. LLS. there's incentives, be light all a we XXX,XXX between compelling but gotten crude with -- can't running limit on increasing a The to going are be barrels and have and but the sweet run should day that. crudes, day light And the we

that you -- tower. throughput limitations of a lower hit results is in in some And the as

September. have is Chalmette we're we lower-value going modifications make is to to don't and X,XXX said project production one of ULSD turnaround enough in of that is a the left and called the the efforts, barrels Chalmette, the us put day. true, into allow increase Matt The that and have some we going second that, it we've cat we're But not in to impacting get maintenance execute unit our We And This consciously a first that that XX,XXX piece that is inside, from feed major all we third hydrotreater, and do the distillates. some going efforts project go quarter. But open half. -- make in to throughput going modifications make we're some advanced to both Erik into rate to in technical. to planned ULSD

Operator

Our next from Mehta Neil question Goldman will with Sachs. come

Neil Mehta

how playing Canada. first to outcomes question your spread as here. out about range from large guys' Western big investors on the crude. of of potential when I guess There's the is on consumers we see talk a views Canadian they Curious

Thomas O'Connor

we're on half success mean, it's and as Basically, curtailments in the Neil, Tom. bit stronger little absolute had in ways of much is as of looking still in third I certainly the had expectations, inventories. our first end up quarter narrow a differentials but the terms the market, in the at year shaping in range. the many certainly, narrowing WCS success it's the than of decrease hasn't of terms

up, quarter, for we quarter But back I would lower our optimize then think say first earlier the in out, what looking the as if that rail were third that the I base I represented, and position an -- from mentioned that do looking is at this think quarter, that we second today. point, if ticked think, particularly business the I in near the off the we're are -- in and it to question, taking term, on trough of where crude move by

IMO that support heavies, or then, the differentials, those to on certainly short the it's back longer and see But think we term whether lights -- do and into for path up. to on we'll do I we have medium factor so the play. whether -- have should moving term, to have for term, margins does at in strong longer think I Canadian start the add the least it's future, considerable some likely near to

Neil Mehta

asset? week. just some you guidance? earlier of into terms some of helpful. And this operational baked Anything can second from been the is And QX standpoint. refinery, That's comment that issues Ohio there a the headlines There reliability Okay. have are your there any in Toledo, issues around the

Matthew Lucey

is This Matt.

or incident. injured. material see was off, our to a for our impact no throughput None were But there's employees is event. the result contractors investors the net we it was There quarter, to change there don't First community. as the and no for an our of guidance

Operator

Cheng Weil. will question Paul come next Our with Howard from

Paul Cheng

a you a blend intention you VGO ability use your call standpoint, the and the to late, is have bit also, Tom, already Are I on from feed bit fuel. to to on so I cokers? -- your is your what directly the take And have question I primarily into what think the to into going a it. high-sulfur to little the addressed A fuel? From PBF's or that high-sulfur talked joined you may apologize. do? the fuel oil you're as VLSFO IMO-compliant trying

Thomas Nimbley

working question. latter about of hours your We been -- yesterday we've part and question. on X.X of the is spent Great some this

have significant fuel of ability our capability economic actually, of obviously, into that. and We an have the all if high-sulfur bring it coking refineries oil doing it's, to -- buy at price

of would some them you in only can the so do crude some cut. a through bring type Now of tower, it

You to think basically if you refineries, it tower. a X.X%. it our bring of to But in that's -- coker. the resid the it cut In we resid and coker crude one try stuck got the buy we can some to light through buy you in and wouldn't get the go from then it tower crude directly because the would

that we've we add But flexibility it and is some buy of been a pushing. can that significant the buy-in

Delaware that we we which flexibility oil and One to bought asset fuel is to and sits high-sulfur of the Coast, East the to bought Paulsboro that around. is the next reasons between logistics move Paulsboro in City, augment

coker recent the fact, City we used In Delaware that turnaround. during

oil, and is the compliant X.X as gets when million FCCs day. buying oil call, mean, barrels there maybe move on reflect take of the that a be fuel as gas ultimately it sloppy, going you're sell end On fact X.X the make demand spreads of weren't the part to a originally, maybe going of said, out be -- gas big a to fuel of we'll light/heavy product fuel. it, and see, high-sulfur be market in this you increase million we'll system our -- question, back we we supplied just of piece parts also an widen going oils was or there's the the for equilibrates to your We ULSD. and the But others crude, and and by believe, the can no that light/heavy to see if just out believe then it and I that. gasoline XX I all light we crude on per that But first

its a -- of the the I piece that have high-pressure fact gasoline for because out the before. in reduces day FCC make feed diesel. Torrance mentioned sulfur. that is a that barrel is sulfur suited refinery to sits with cat the refinery Torrance it in of California complexity. to in again, point below you equipment to The car car XXX,XXX I'll this Torrance front the The cracker has and make point I've the ideally system would X.X of

the So you to material decrease least could material. literally there and equilibrate. X.X something make blend will higher fuel go do fuel sell like the at or economics are markets into as valve that, cat to more the valve And if for then shut that it the the cracker,

in we'll supplying different I'm be saying there's that think the what ways. turn of fuel and is I So be number to knobs going a

Paul Cheng

system? resid you can your you how Can is quantify buy the into much

Thomas Nimbley

I certainly asked north barrels and probably yesterday, day. the question of it's a XX,XXX

Paul Cheng

sure to order you'll the a mean or lawyer that have -- an to some in of And how I'm fuel of challenging that industry those saying into of... a the compliant issue patent when that basically your reviews get thing, and may that, the not How just is patents some lawyer have difficulty that's -- that that avoid aware blend that be competitors, there's your Exxon in to that terms Shell, IMO curious holding compliance. when particularly patent I

Thomas Nimbley

to doing We certain of things. actually information we by the to seen course, not point, constrained this formulations doing seen going -- have certain we're the to that of but the that, that Total doing At have reason is Exxon no Hang be we is is And Tom's... certain things, have things. BP know on, details haven't they Paul. we believe that proposed.

Thomas O'Connor

a way this The dramatic not system ourselves users to be to selling are add. to would I relates setting our end it designed is as directly. at wholesaler Paul, fuels, up point we IMO

be market in to selling the will and We that. components selling

else. somebody will So be those issues on

Paul Cheng

I see. Oh,

sell VLSFO not to... product, you finished So going are actually the to the

Thomas Nimbley

That's correct.

Thomas O'Connor

time model competing We players. we the have business with a may global it time, to have but to bunker don't big be from

Paul Cheng

for market major to you that components? be wholesaler a just is liquid And enough of

Thomas O'Connor

Yes.

Thomas Nimbley

Yes.

Operator

Pickering, Our Holt. next Matthew from question with will Blair Tudor, come

Matthew Blair

the QX? covered any already QX? you've if this, Coast sure of provide not outlook to in you I'm And could for sort but East crude-by-rail volumes your WCS

Thomas O'Connor

Yes. barrels quarter, range. the day we I third quarter, XX,XXX in to and down would XX,XXX did In It's barrel And Tom. the second day. the a moving that number anticipate -- a to XX,XXX

Matthew Blair

We're in? coming turnarounds? started you're I a Could a seeing diesel X the at QX just a seeing talk refineries come of inventories all about And result new off you product looks Coast has running West Is there? this Are hoping and, little on you soft. bit five harder the Any West you highs. was the then off of commentary guess, bit QX seeing a just I little gasoline, PADD It more quarter and market. like provide Coast? the imports dynamics of of commentary little on gasoline jet year could

Thomas Nimbley

Yes.

of motor movement part rebalance, I good the the there a started we've up. the course, planned that's -- margins one the and a reasons rebalance unplanned think why quarter, a chain in ships of the California, part of first in while financial to California are et we lot CARBOB, of it seen cetera, it's responded, have, Torrance. quarter of had in there good the -- and downtimes. in supply before was quarter early number the X, obviously, -- California, and in the In in so showing PADD second because significant longer and such does -- takes But in

me Los that now, the to particularly out from the telling Angeles. leaving -- offices, the the port Coast it And as start ports, ships West from the of in the you see took you folks only it and various out look windows that it's overcorrected,

So with right is dollars the and imports lower arb now, capture it a got down. had reason than actually to It's it's of couple that market -- it -- was the the moved recovered in a to primary barrel down try recover. a surge imports that starting to

going -- forward. to we're think we be fine California will going So

Thomas O'Connor

New destined have spread. mean you -- which being we've seen PBOB/RBOB York We into harbor, are now finished the high-octane via where West that higher a markets components deviated were for other Coast I

Operator

from will come Our Flam with Patrick Simmons Energy. next question

Patrick Flam

around could and the kind I that's political the update wanted about guys issues an X closure Line of to there. you your talk the thoughts are close issue been ask us of know in give you to turned Michigan if on latest down. I

Matthew Lucey

We We're Michigan. politicians certain it's State are. of I We're suicide it. political for in working it. think Look, the monitoring

through heat tremendous homes pipe. a obviously, lot and come unsafe nothing of a have propane of with or to that serves amount refineries. that irresponsible There's You the pipe, environmentally it

too as go Toledo runs would result, be the from a impacted. We not the -- market. rest of down -- indifferent our would

your products. and Midwest. I from do for it clean Upper be and I think a Trump's decline for and would XXXX quite jet be to think response boost the in more there end campaign all it fuel your would frankly, production President and a of production would major government, a effort federal the immediately would would gasoline in major products Michigan Your be precipitously, event paying the up significantly production, people

day, hara-kiri We're expect would to So the administration they the is White are politicians either my it's it, guess or will something commit that Michigan not the but Trump I at if step the do, playing the clearly end of and in. the House monitoring with. politicians

Patrick Flam

the Great. That's guys in run WTL. very market, we're and lighter light new up, barrels especially continues of this any to also, ramp increased crudes that Do lighter My grade seeing you basically an of just to capacity have question helpful. across production capacity Okay. is second to entering general around system? run as the prevalence Permian

Thomas Nimbley

the obviously lighter but run the more get, process. is it lighter can they We to do crudes, difficult

Brent ran bit these Brent African easier -- us. we condensate this crudes is month, running WTI than little these a although or West or itself, Permian a actually a these is Brent crudes, light not running of very easier So a sweet running Brent-based crudes, for crude

run can them, in but no again, we business. So this lunch there's free

to If of you that, gravities ratio between -- run you're your cut your X probably and a Y., back designed deviate crudes from certain if throughput. have going of to unit's to range a

Thomas O'Connor

I would add. also

more at of West Texas the think at light us, Jones that's just as western resid-ing a the PADD restrictions. Permian By to gets to or point, that due looking sell barrel product neat extra we're opposed to a X there I scene. Act basically a more generic or light WTL, time

Operator

question last Jason come from And will Gabelman our with Cowen.

Jason Gabelman

kind to a high-sulfur run normally fuel ability crude translating transmission broken mentioned expect mechanism do not that the And I that fully your I'm through heavy translate way of the from in know would to? see the you directly guys could wondering, discounts risk prices fuel to system. you or you oil be it high-sulfur

Thomas Nimbley

Yes.

international might -- X, happens happen there'll be think is, market I what we think market high-sulfur for XXXX, thing -- a fuel Because market there the lag. is resids. is January initially, no --

buy be their out be refinery. will man you this capability spell cliff. to coal They get have against going got plan a who over competing that is try into a the and it has to that to to now, So driving refiner the or going probably material Right can plan. bring and

lag this because and Venezuela. for that to constraining the take this the advantage exists to some medium that of withheld a with of market on because crudes. simply thought various try sanctions Canada be is and works now could benefit and The continuing the -- crudes are crudes say right their It on reason I there non-free situation from getting heavy actually they're increased other being and Iran to prices

to going want there's the something? probably to there's to So my add be, going In lag. you really formula. in not long anything a that disconnects be that term, mind, Tom,

Thomas O'Connor

trading definitely expand product that our crude I of as mean, slight is relates little to seen I markets very, the just on backwardation. markets IMO, oil ahead way to from the high-sulfur at new then is we've which the fuel crude, things a current that view this it sort like the very I you And from are is to market, light steep bit differential market of X.X just a perspective, mean of development think spot flat trading Yes. to are. crack basically answer, which where a have right?

crude narrow IMO light/heavy light world. on between definitely basically -- is in the to are trying are are definitely the slate that I'm crude are very -- what the we pending undervalued in markets that torn today we heavy as changes into environment basically, are much and So that an the horizon say go narrow

fuel XX high-sulfur it in or definitely Cal the stands than fourth today, So yes, is as high-sulfur crude. point some at quarter cheaper in

running the wanting with very very, be at because be going material somebody point. to keeping at crude. buying to mean ultimately going as derate going potentially heavy, your to running -- the discounted, you're you opposed can of else's get full you're remain refineries are be less that somebody's if I to into and So coker this you're fuels going crude to industry would to high-sulfur expense

Jason Gabelman

that comments. those made supplying on just like could appreciate If I out follow-up another there that a of sounds just there's ask comment earlier lot was a And that I you gasoline the the it about that West fact that's rest out earlier supply XQ there? the the amount persisting higher Coast. East backfilling supply the think driving on And of you now Coast What gasoline of year? of see the in through do you is global do

Thomas Nimbley

Obviously, the has I to comes are incentive and product harbor a as referring gasoline. in in. York it, every they're But worldwide the RVP I is -- it come gasoline go into some Actually, we octane there'd pressure is the to Coast is little Tom cargoes bit bad of West change not as certainly will get look or light bad. not as when balances RBOB/PBOB East butanes were down you redirection come IMO headed under towards that given U.S. Coast. fact as it some of West gasoline going the the seasonally Coast from think to back to were as spread cracks And when be tightened, at support coming does New gasoline still back that balances, was to think the get

Thomas O'Connor

right numbers got the across runs -- seeing mean Yes. I I mean challenged weakness gasoline now. anywhere we've sort have latter we've we're looking any been not increase but us. decent into point. at to not historic Maybe as runs at looks part in U.S. the of material of market gasoline chance for have the to a summer we'll this August, throughout any

Operator

And I'll turn Tom there to remarks. are for back Nimbley no it further questions at so time, this closing

Thomas Nimbley

talking today, good for look at we everyone, us and, forward Well, again joining thank the next call. hopefully, to to results very with you you much, very and

Operator

This today's your program. for does conclude Thank participation. you

disconnect. may You now

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