Welcome to the PBF Energy Fourth Quarter 2013 Earnings Conference Call and Webcast. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following management's prepared remarks. (Operator Instructions). It is now my pleasure to turn the floor over to Matt Lucey, Chief Financial Officer. Sir, you may begin.

Thank you. Good morning and welcome to our earnings call today. With me are Tom O'Malley, our Chairman; and Tom Nimbley, our CEO. If you have not received the earnings release and would like a copy, you can find one on our website, pbfenergy.com. Also attached to the earnings release are the tables that provide additional financial and operating information on our business. Before we get started, I'd like to direct your attention to the forward-looking statement disclaimer contained in today's press release. In summary, it states that statements in the press release and on this call that express the company's or management's expectations or predictions of the future are forward-looking statements intended to be covered by the Safe Harbor provisions under federal securities laws. There are many factors that could cause actual results to differ from our expectations, including those we described in our filing with the SEC. As also noted in our press release, we will be using several non-GAAP measures while describing PBF's operating performance and financial results as we believe these measures provide useful information about our operating performance and financial results, but they are non-GAAP measures and should be taken as such. It's important to note that we will emphasize adjusted pro forma earnings information, our GAAP net income or GAAP EPS reflect only the interest in PBF Energy Company LLC, owned by PBF Inc. We think adjusted pro forma net income and adjusted pro forma EPS are more meaningful to you because it presents 100% of operations of PBF Energy Company LLC on an after-tax basis. With that, I'll move on to discussing the fourth quarter and full year 2013. Today we reported fourth quarter operating income of $142 million and adjusted pro forma net income for the fourth quarter of $73.6 million or…

Thank you, Matt, and good morning everybody. Before discussing the fourth quarter results, I want to briefly comment on the Paulsboro refinery operations in the month of January. As we announced on January 7, the Paulsboro refinery experienced a complete loss of steam primarily due to an instrumentation freeze up in the boiler feed water system. The loss of steam resulted in the unplanned shut down of most of the refinery units. Plant personnel worked through the intense cold of the polar vortex and we were able to return the plant to operation over the course of several days. The extreme cold that we've seen in the Midwest, the East Coast, in fact, the entire country has provided for a challenging operating environment over the course of the first six weeks of the quarter. And with only a few exceptions our teams at all of our refineries have performed admirably under very difficult condition. Regarding our fourth quarter financial results, PBF had our best quarter of the year. As with previous quarters the market was the biggest factor for all of our refineries. Throughput for our overall system was about 459,000 barrels a day, which, as Matt mentioned, was in line with our guidance. The Mid-Continent averaged about 150,000 barrels a day and the East Coast system ran 307,000 barrels a day. For the quarter, operating cost on a system-wide basis averaged $5.01 a barrel, and for the year operating cost came in at $4.92 a barrel which is slightly above our guidance for the year. Operating expenses were impacted by the fire at Toledo early in 2013, lower than expected throughput and higher natural gas prices. During the quarter, the Mid-Continent 431 crash spread averaged $10.28 a barrel, down from the third quarter average of $14.97. And our margin…

Thank you very much, Tom. I commented in the third quarter that I was unhappy with the results and the job that we did during that quarter. I will comment today that I'm happy with what we did during the fourth quarter. The turnaround of the coker on time and on budget was truly something that proves the company can properly operate its equipment and run it on a first class basis. The year of 2014 is going to be a very important one for the company. I finally feel that we've turned the corner on the East Coast. We've gotten to a point where I believe we can generate sustained profitability in a normalized market. We have made a number of changes. Of course, first and foremost is our ability to take delivery of very significant quantities of rail delivered crude oil both from the Bakken and from Canada on the East Coast. Tom's comment on our approach to rail car movement in using now starting April 1 only the much safer updated, what the industry refers to as, 111A cars is of great importance. 100% of our Bakken will be delivered in these cars. These cars are probably 95% controlled by us. With regard to Canada, we will be going again to 100% of the new cars starting somewhere between June 1 and June 30 we have a group of cars going off lease at that time and that should allow us again a greater margin on safety, on delivering railcars to the Delaware City refinery. The ultra-low sulfur diesel ability that we now have is also of great importance and should add to the profitability of the company during the year 2014. The team achieved this without some huge investment. At the end of the day we'll…

The floor is now open for questions. (Operator Instructions) Thank you. And the first question is coming from Jeff Dietert with Simmons. Please go ahead.

I was hoping you could talk a little bit about your heavy crude rail unloading capacity. It appears that you have been monitoring rail loading capacity in Canada and trying to optimize the timing of your facility with loading capacity in Canada to bring crude in. How confident are you in those Canadian facilities coming up? Are you working with a supplier in a particular loading facility to deliver to Del City? Could you talk about your strategy there?

Yes, look first of all we're working with just about everybody up there, and following very closely the progress or lack thereof that they're making. Clearly this incredible winter has an impact and has slowed things down there. Our facility in Delaware at the present time can take in about 40,000 barrels a day and that's what we are running at. We made a decision and it's from the safety point of view that we really don't want to expand beyond that number unless it's would be for new style of railcars and we have significant deliveries of those rail cars, the heavy rail cars during the second half of the year. As I mentioned we will be using on the 40,000 barrel a day number our own cars or new cars being supplied through third-parties. But it's really a combination of the loading facilities, the rate of delivery of the railcars to us, and the timing of our facility is not an issue. We basically can have that available if we wanted to start it today we could have it available in, I suppose three months fleet, taken delivery of all the equipment we will be putting it together as we now see the schedule probably starting in June or July, finish the thing off in September or October. We're trying to get the ideal weather window also in building that track. We've done all the civil work already, the earth movement. But it's impossible for us to tell you how quickly these Canadian facilities will come on, but they are coming. And we are seeing progress albeit slower than we hoped.

Jeff, this is Tom Nimbley. Just on that last point that Tom was making, again we might use the right word, we monitored very closely, we're up there quite a bit, the Bruderheim facility the Canexus facility, has actually started loading some unit trains, it's a work-in-progress that the weather is very difficult. We've been at the terminal in Delaware City, which is probably in our view the next likely terminal we get to be able to move unit trains. They are saying that could be May or June. We question that just simply because as Tom said things seem to move slower in Canada. We do think the loading capability infrastructure is going to be booked out, but it could well be a couple of months later than what we hoped for six months ago.

And on your light crude capacity, I think your initial estimates at capacity were about 80,000 barrels a day and you're now running 95,000 barrels a day in 4Q, and capacity 105. Could you talk about your success in getting more capacity out of that unit than you initially expected?

I think that's just good operations and we managed to build the first class facility there, it's you build these things and you hope you will meet the capacity that you indicated we've realized now that the facility can do more than we initially thought about. It was well engineered, well designed, and well constructed, and we are adding additional discharge capacity there, so that we will get that unit up to a point where we can do probably upwards of 130,000 barrels a day. But again everything with time, everything carefully obviously safety on the rails is paramount importance. We do have the opinion by the way that it would be nice if the railroads would keep the trains on the tracks.

Finally, would you mind providing refinery gross margin for the East Coast in Toledo individually?

Would we mind, Matt?

Sure for the quarter the gross margin on the East Coast was $7.05 and for Toledo it was $14.96.

And we will go next to Evan Calio with Morgan Stanley. Please go ahead.

Another cold and snowy day here on the northeast, and I know that's been the story year-to-date and then you guys discussed the operating impact, it is also contributing significantly to tie the northeast diesel margins -- diesel market. And just any comments or outlook on the diesel markets and also whether you believe the recent uptick in diesel imports is or will continue to support some of this recent RIN price movement?

I think first of all you know as ever was one has to look at inventory levels to deal with any projections on either diesel pricing or gasoline pricing or propane or whatever. And certainly inventories provide you with a favorable picture. They are lower than they have been. We are seeing significant, well I don't want to call it necessarily diesel consumption, because diesel and heating oil to some degree are interchangeable on a low-sulfur basis. So certainly we're seeing a good market place there. We continue to benefit from that. On the other side of the coin we have a bit of a decrement on natural gas. Propane, which we were probably selling during the summer at $1.20 a gallon is trading in the market today well over $3. So with -- this is a seasonable thing that somehow conveniently we forgot over the last few years. The winter is the time of highest oil consumption. It's not the summer on a worldwide basis. With regard to imports, certainly we live in a relatively free marketplace and when the arb (ph) opens you can expect imported product to come here at a greater rate and the arb (ph), highest it can open from a number of market areas. I see it certainly a tight middle disciplined market for the balance for this quarter and probably stretching into the second quarter.

Secondly in Toledo, syncrude was a big tailwind in the fourth quarter and to be realized in parts of the first quarter where 35% to 40% of your runs are syncrude there, if that advantage was reduced, and syncrude traded closer or to premium to TI because it's an exportable light sweet crude. How could you source more local TI linked crudes into Toledo and what's the -- well if you could tell us what the tenor on the Ambridge ticker pay is and how that might factor into your potential slate modification?

Look, for the moment we're certainly taking all the syncrude we can get. It's still trading at a discount and we think in a change underway in the Mid-Continent with the conversion of a couple of the refineries they have from sweet service to heavy service, the availability of syncrude was -- is we believe a bit better than it has been in previous periods of time. Certainly we're an important outlet for the syncrude just as they're an important supplier for us. So obviously if syncrude trades at $2 premium as opposed to $1 discount that's overall negative to us, and trying to figure out what a particular pipeline or other transportation resource will do to Toledo is a cast that we're perhaps not capable of evaluating properly. But my perspective on the Mid-Continent is that we are succeeding in generating some other crudes into that refinery. I don't want to go into too much detail and offer my competitors some advantage on that. But you're aware we are trucking crude in. We did now build additional crude oil storage at that refinery. So Toledo looks like a very strong card in our hand for this coming year and I believe future years.

Evan, this is Tom Nimbley. I just add one point little bit in a wheeze, but syncrude has a higher value to Toledo than any other crude, obviously that can be price dependent. But mainly because it is a synthetic crude, it has no metals in the bottoms. That's all going into taking out what the upgrade is. And because we crack 100% of the crude bottoms from the crude unit in the Toledo SEC, the cat cracker that provides us yield advantages that are rather significant. So if it goes to $10 over we have to find substitute crudes. There's no doubt, but it a very resilient margin crude.

Is that -- could you quantify that benefit? Is that $3 a barrel to $4 a barrel?

One we not, honestly one we not do that. Look the other part of that is please tell me the middle distilled price, please tell me the gasoline price, please tell me the alternatives that we have there. Trying to model this thing perfectly of 40% syncrude intake is not the way to go. We've got to be flexible. We're a merchant refiner. We've got to be able to buy what's cheapest and best coming into our refinery and when the syncrude does get to an inflated level or more importantly when we're suddenly pro-rated that's not a happy moment for us. We're looking for alternatives all the time and frankly the kind of hidden alternative which hasn't come to provision yet, but I believe will, is the Utica. I think it will be there and I think we will be taking crude oil within a year or two from Utica in reasonable quantities.

And we'll go next to Roger Read with Wells Fargo. Please go ahead.

Just to hit the Canadian thing a little bit more, as you look at it deliveries of kind of true WCS versus Bitumen, and then there was a comment in the presentation, I believe it was Slide 9 we talked about shifting a thousand coiled in insulated cars. Can you clarify what that means? Does that mean we should expect it to be less Bitumen capacity that you can rail down and it will be effectively WCS that's coming to the East Coast?

No, that doesn't mean that at all. We went up on the 1,000 cars. We, in essence, probably being run over by the luck wagon no intelligence on our part, had ordered more cars than we would ultimately need. The 1,000 cars that we switched over to from heavy coiled and insulated cars to the light cars allows us to provide a 100% of railcar capacity for our intake -- our expected intake. We have upped our expected intake of Bakken quality crudes and some other Canadian crudes, which are not as wide as Bakken, but some medium sellers. And given the situation with real safety we just made a decision within the company that we would not use third-party cars if they weren't the new type of cars and there aren't that many out there. It's going to take some years to catch-up. That's going to leave us with plus or slightly minus 3,000 heavy cars that should be sufficient to carry out what we need in terms of the quantity of crude oil coming into the refinery. Each car carries about 520 barrels of heavy crude oil might be a little bit less on the Bitumen due to weight considerations. So we can cover our needs there. That fleet of course will give us the capacity to bring in about 80,000 barrels a day of Canadian heavies and good part of that WCS, but also as much Bitumen as we can use provided we have a real price advantage on it.

And then on the CapEx side the $250 million to $275 million the turnarounds at Paulsboro in Q1 and Toledo Q4 or Q1 of '15, how does the $250 million to $275 million account for turnaround spending is that within the $250 million to $275 million or is there additional spending beyond that we need to think about?

Yes. Not really, it is inclusive of the turnarounds.

Okay. So no, I mean, obviously there is always some minor stuff and no major expenses we need to think about beyond that?

Correct.

I should point out and I do this to my colleagues from time-to-time. I've been in the business a longtime and in my history, I have never approved a project that had less than a 30% IRR. And I believe the other people in the industry approach it the same way. The sad part about this industry from the approval process to the reality I haven't seen the 30%. So our company is concentrating on the small projects, the infrastructure projects, we're not rushing out to build billion dollar units. They haven't offered the return to the companies that have built them and I don't think they will offer the return in the future. So we are concentrating on improving everything we have at the margin and that means we're not coming and stating we're spending some huge sum of money. Well, what is the total turnaround cost now that you have? It's well over $100 million.

For 2014 it's for the two turnarounds that we've referenced the two big ones Paulsboro in the first quarter and Toledo, its $120 million.

So the balance is the spending divided between the three refineries really concentrates on infrastructure projects, the expansion of our rail capacity at the Delaware City refinery, the completion of the conversion to ultra-low-sulfur heating oil and diesel on the U.S. East Coast additional storage out in Toledo. That type of thing where the resilience of the return on the investment is less based on a projection of what the crack will be, but rather controlling costs and giving us greater flexibility and opportunity.

And we will go next to Blake Fernandez with Howard Weil. Please go ahead.

I had a couple of housekeeping questions and then one broader macro question. I appreciate the gross margin regional breakdown. Is it fair to assume the LIFO benefit was split fairly proportionally between your capacity in each region?

For the quarter?

Yes.

For the quarter, well the East Coast is a bigger throughput in the East Coast but the midcon actually had more LIFO income in the fourth quarter.

Okay. So that's weighted toward midcon?

Yes.

And then Matt, I think you gave us the guidance. I wanted to clarify for OpEx $450 million to $475 million, is that a full year or is that a first quarter guidance?

Full year.

And then your subsequent commentary around natural gas it seems like obviously with the spike we are seeing there could be some upward pressure is it fair to think 1Q toward the upper hand or even above that range?

I would say that obviously we're only halfway through the quarter, but the first month of the quarter we had extraordinary natural gas prices. We do not see it's something that's going to continue into the future. But clearly one-third of our first quarter was materially hit on operating cost, because of natural gas.

And then I guess my broader question, one of the main macro things we've been looking for is potential to begin barging crude out of the Gulf Coast over to the East Coast and I think you started eluding to this in your prepared remarks. But I was hoping you could offer any insight as far as what you may be seeing there and if there are opportunities, what kind of capacity you may be able to see change there in addition to what you're doing on the rail side?

I'm going to answer that question. Look, we move from the Gulf Coast Arab light up to the refinery in Paulsboro on a consistent basis. We have done so over a period of time. And the average cost per barrel or the actual movement is about $1.80. Barge for American flagship movement at today's rate would be $7 a barrel. We're not quite sure how one can justify that. We're certainly not doing it nor do we contemplate doing it. We haven't taken American flag barges for crude oil movement from the Gulf Coast nor have we taken ships nor do we intend to do so. That is of course one of the stinging issues on the question of crude oil export. We, like most other people in business are for free markets. But I'm not quite sure how it's a free market when the consumer on the East Coast will have to draw an extra $5 a barrel in freight costs, which comes up to about $0.12 a gallon on every gallon that would be produced from that type of crude. So I think as long as we have an American flag law and as long as we have, you may remember President Bush in 2007 signed legislation that was termed the Energy and Security Act, I believe, and the security was we had to make sure that our country was not dependent on energy imports from the third-parties who generally don't like us. And I -- as a result of that we put in a mandate to use ethanol, 10% of the gasoline pool. Well if there's no security question and when you're going to exploit crude, please remove that mandate and remove the American flag law, and then we can move forward. Now there are I believe some of our competitors on the East Coast are moving crude up on barge and by ship. We don't quite understand the economy.

I will make this comment in that regard. We look at these economics all the time as does the competition and we cannot overcome the hurdle of the government's act effectively. But we're in a little bit different situation then on competition and we've had one in that. We because of our sour capability and the fact that we have cooking. We look at say an Eagle Ford would have to compete against Vasconia or a medium sour crude. Some of our competitors are going to look at that versus waterborne perhaps West Africa and sweet crude, which has a different paradigm if you will. So our flexibility to switch from sweet to sour, light to heavy usually drives us those waterborne movement out of the Gulf Coast have not been economic.

And we will go next to Cory Garcia with Raymond James. Please go ahead.

Recognizing that whether has clearly been a factor for crude by rail in recent months, also hearing some broader chatter about the rails potentially slowing down their service a bit, maybe just a day or two for safety reasons. Do you guys have any updated color on that or any sort of cycle time update in your Delaware City from both the Bakken and out of Canada? Tom O’Malley: It's been a bit slower than we had expected, but I think you defined it correctly, it's a case of a couple of days more. That means that your average number turns on your rail cars drops a bit, but it hasn't been significant. We, frankly, are of the opinion that the railroads should run the trains at a speed and in a passing mode and through heavily populated areas in a manner where we're not going to see derailments. We're doing everything we can by providing the safest rail cars available to deliver this crude. But if you don't keep that trains on the tracks, it's really a tough game. Look, the winter has slowed down everything those of even New York are trapped in New York; we're out here at the Credit Suisse conference and there will be lots of people who won't be coming back to New York today or tomorrow, I suspect. So winter has affected everything, but the negative impact that the winter has had on operations on the natural gas price on a number of things has been to some degree made up by a much better middle distillate markets, much better propane markets etc. So all in all, winter is just a fact of life and we're living with it.

One other comment that I would add, this thing is still evolving and will evolve for many years with the infrastructure, but we are now just recently have started moving unit trains to Delaware from Buckeye owned facility in Hammond, Indiana. And that was a light sour blinds, so we can mixed sweets from Canada, we have a lot of options there. But the important thing is that has less transit time; it's seven or eight days. So effectively with all those trains, we actually can get three turns. So there are some things that are happening that are positive, but clearly with until the whole supply change gets its act together on moving by rail you're going to see pressure just slow things and we support that.

Yeah, that's great. You actually read my mind. My next question kind of revolves around that Buckeye facility. Any update on the sort of pricing you're seeing for those light light-sour barrels and obviously --

Again, I'd like to just interject here. We're in a very competitive industry and we don't like to talk about that, okay? There is plenty of public data available and let's say that it's because of our configuration being able to handle sour crudes on the US East Coast medium sour, so we're really the only guys that can take it here. So good situation for us and beneficial to us, and to some degree we substitute a little bit for the Bakken, substitute a little bit for the Canadian. And again what the analytical community will have to understand when reviewing our operations is that we are constantly willing to make changes. We don't get into a situation where oh, gee, well, we ran this stuff last month and it was nice and those guys are going to sell it to us again. We are constantly out there beating the bushes trying to find something different and our crude slates are going to move around. You may find us in one or two months taking more Isthmus or Maya crude, suddenly there maybe some very, very inexpensive N100 or Basra. We really have to move around the chart and that's what you should expect us to do. And when we move around that circle of availabilities, we do so only when we see better margins.

I completely understand. I guess that keeps its interesting for us. Thank you.

And we go next to Rakesh Advani with Credit Suisse. Please go ahead.

Just first quick question. Would you able to give the working capital impact in the fourth quarter?

Could you speak up? There are those of us who can't hear you.

Can you possibly give the working capital embank number for the fourth quarter?

What I'd tell you is we ended the quarter at just around 14 million barrels. And so from a inventory standpoint, it was in line, it was basically in line with where we were at the end of the third quarter. The cost basis for our LIFO barrels came down a bit, but and from a barrels perspective it was relatively flat.

And just also relative to what you I guess historically seen, are you seeing more product trying to get into the East Coast via the Gulf by any chance like what it is a pipeline --

No, that's just the standard. You got colonial capacity, you use it, you move it up. You can't forget that the East Coast is only I would guess today 32%, 33% self sufficient in the manufacture of oil products. So we are always going to be taking product into the East Coast either by pipeline or by import from offshore sources that that's just a given.

I guess relative to -- are you seeing a bigger push of maybe trying to get that and use that excess products relative to what's historically is coming or?

No, I mean colonial is full-blown that that's it. And offshore supply, if anything, has dropped off a bit.

And there are no further questions. I would like to turn the call back over to Mr. Tom O’Malley for any closing remarks.

Thank you very much for returning today's conference call and we wish everybody good health on the East Coast during the storm and take good care of yourselves. Thank you.

Thank you. This does concludes today's teleconference. Please disconnect your lines at this time. And have a wonderful day.