PBF Energy Inc. (NYSE: PBF) is in discussions with its affiliated MLP to drop down assets to increase the partnerships EBITDA, the company said April 30.
Tom Nimbley, PBF Energy's CEO, said, the company is in discussions with PBF Logistics LP (NYSE: PBFX) about the potential contribution of a pipeline and loading rack “as part of our ongoing effort to unlock value in our logistics infrastructure.”
PBF Energy’s Delaware City Products Pipeline and Truck Rack are located at the company’s Delaware City Refinery and supply refined petroleum products into the Northeast market.
The pipeline, with 125,000 barrels per day capacity, connects the Delaware City refinery to critical distribution facilities in Pennsylvania and New York. The Truck Rack is a 15-lane loading rack with a capacity of 76,000 barrels per day.
“We expect that the potential acquisition of the Delaware City Products Pipeline and Truck Rack by PBF Logistics LP would be supported by proposed 10-year term agreements with subsidiaries of PBF Energy containing minimum volume throughput commitments,” the company said.
The potential transaction is currently being reviewed by the MLPs conflicts committee and their advisers, Nimbley said.
“We have also identified additional assets which we believe could increase our backlog of MLP-qualifying EBITDA to approximately $200 million.” Nimbley said. Any transaction would be subject to negotiation and execution of a definitive contribution agreement.
PBF Energy's financial results reflect the consolidation of the financial results of the PBF MLP. PBF indirectly owns the MLP’s general partner and about 52.1% of the limited partner interests as of the end of first-quarter 2015.
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