Thomas O��Malley has spent over 30 years in the refining business. During his career, he served as the CEO of Tosco, which he sold to Philips Petroleum in 2001. Then he took the helm of Premcor, and he sold that firm to Valero (NYSE:VLO) a few years later.
Even though he is now 70 years old, O��Malley has not slowed down. In fact, his latest refining company �C PBF Energy �C has just filed to go public. The company��s funders include Blackstone (NYSE:BX) and First Reserve, which both have extensive background in the energy business. Citigroup and Morgan Stanley are lead underwriters on the deal.
Launched in 2008, PBF has seen a big opportunity to buy refineries at lucrative discounts because of the global recession. As a result, the company was able to snag government support as well as negotiated better terms with unions and vendors.
PBF quickly bought three refining operations from companies like Valero and Sunoco (NYSE:SUN). These operations already had capital investments of $2.5 billion (since 2006).
PBF now has a combined 540,000 barrels per day of refining capacity in the U.S. (in Ohio, Delaware and New Jersey). The company processes gasoline, heating oil, lubricants, asphalt and jet fuel. Many of these are part of long-term contracts, which provide for stable revenue streams.
For the six months ended June 30, PBF generated $5.4 billion in revenue, up from only $440 million in the same period a year ago. Of course, that jump was primarily due to starting up several refining operations.
The company should continue to increase revenue over the next few quarters. As the U.S. economy continues to recover, so has the demand for refining capacity. What��s more, a large amount of refining capacity has come off the market. According to a report from the EIA, the number of operating refineries fell to 137 in 2011 from 146 in 2008. It also forecasts that refined p! roduct d emand will reach 2008 peak levels by 2013.
What��s more, PBF was able to purchase choice assets at the bottom of the cycle �C at a fraction of the replacement costs — which means that the company is poised for strong profitability going forward.
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