PBF Energy Company

Oil refiners, meet the new kid on the block. PBF Energy formed in 2008 and has since spent almost $1 billion buying three oil refineries from  Valero and Sunoco. Its refineries, located in Delaware, New Jersey, and Ohio, have a combined production capacity of about 540,000 barrels per day. The refineries produce gasoline, ultra-low-sulfur diesel, heating oil, jet fuel, lubricants, petrochemicals, and asphalt for the midwestern and northeastern US. PBF Energy, which is majority-owned by investment firms The Blackstone Group and First Reserve, went public in 2012 with an IPO that raised $429 million. IPO The IPO came as a quick turnaround, before PBF Energy was able to recognize any significant revenue, and the company plans to use the proceeds to pay back its principal investors, Blackstone and First Reserve. Now that the company is public, Blackstone and First Reserve continue to control a majority of its combined voting power. Operations PBF Energy was created by Swiss oil refiner Petroplus to help it establish a foothold in the US. Petroplus and The Blackstone Group each invested $667 million to begin buying oil refineries at the height of the global economic recession, when larger companies were looking to sell off assets to drum up cash. PBF first bought the Delaware refinery from Valero in 2010 for $220 million. (The low price tag came because the refinery had been shut down since 2009). Next came the New Jersey refinery, again purchased from Valero, for $358 million. At the same time, Petrolplus, wanting to put its focus back on Europe, sold its 32% stake in PBF Energy to Blackstone and First Reserve for $91 million. In March 2011 PBF Energy bought the Ohio refinery from Sunoco for $400 million, and in October 2011 it got the Delaware refinery back up and running. Strategy The company has already inked long-term deals with Statoil as the only supplier for crude oil at the Delaware and New Jersey refineries, while Morgan Stanley Capital Group (a commodities-based subsidiary of Morgan Stanley) will supply all of the crude to the Ohio plant. In addition, Morgan Stanley Capital Group will buy most of the clean products and intermediates produced at the Delaware and New Jersey refineries. PBF Energy is not anticipating any shortage in demand, since most oil refineries in the US are located in California, Texas, or the South.