Paul Davis: The big move in California markets really is the seasonal change out from winter gas to summer gas in Los Angeles. So, that’s the big pop you’re seeing on the cracks that you guys look at every day. In addition to that, jet fuel is just well bid in the LA market and San Francisco markets with the arbitrage from Asia pretty much shut down. So, you’re seeing the impacts of a short market moving into the seasonal high seasonal demand periods.
Ryan Todd: Thank you.
Operator: Your next question comes from Manav Gupta from UBS. Please proceed.
Manav Gupta: Hi. Good morning. I wanted to ask about the renewable diesel market a little, and I fully appreciate that these are developments which happened a couple of days ago. So, but I’m hoping you have more information than we do. A few days ago, it looks like New Mexico passed the senate passed the low carbon fuel standards bills, and this could go into effect in 2026, and it’s a very aggressive program. It goes from 0% to 20% in, like, four or five years. You haven’t seen that before. And so, I’m just trying to understand if this all works out. Given your location, could this be a new market for you besides California? Can you move the product to New Mexico if things work out in this direction?
Matthew C. Lucey: Yes. One, I think the point of what happened in New Mexico speaks to the investment thesis in RD, and that is, over the course of time, governments are going to price carbon to incentivize, the manufacturer of renewable diesel, specifically to our ability to, competitively deliver product into New Mexico. It’s too premature to say that. But I would also say, the market is a bathtub, and to the degree New Mexico draws other barrels, it opens up other markets. So, I’m not so focused on our direct ability to impact, the New Mexico market in particular, but all these things cascade, with each other and it’ll free up, demand in other markets. But it’s certainly constructive and then consistent with our investment team, as I said.
Manav Gupta: Perfect. My quick follow-up is, and you kind of mentioned this also in the earlier parts of the call. You saw this big Mid-Con weakness. It looks like it’s abating, the cracks are rebounding. And just, like you gave an outlook on West Coast, what are you seeing in the Mid-Con market? Is this all this weakness is seasonal? And should we expect a strong, 2024 as it goes to overall the Mid-Con region in terms of cracks? Thank you.
Paul Davis: I mean, the Mid-Con economics in the fourth were seasonal. And it’s something we normally see on an annualized basis. As we move into the first quarter, whiting falling over was definitively beneficial to the cracks and you’re seeing that. So, that’s been the catalyst to move the cracks forward. There’s been some crude advantages out of Canada for PADD 2, those are going to come to an end as we get into Q2 and Q3. But I think we’re expecting normalized cracks in PADD 2, going forward.
Manav Gupta: Thank you.
Operator: Your next question comes from Neil Mehta from Goldman Sachs. Please proceed.
Neil Mehta: Yes. Good morning, team. The first question is just how you’re thinking about capital allocation in the context of M&A and what do you think the market is I mean, it’s been a big part of the PBF story and how you’ve gotten to where you are today? Do you still think there are opportunities out there? And what’s the overall framework for thinking about it?
Matthew C. Lucey: Well, I think M&A, as I mentioned in the comments, a disciplined and rigorous capital allocation effort. And M&A, is no different than internal projects, or share buybacks. We’ll evaluate everything in the market as we always have and judge them against each other and allocate the capital as best we can. I don’t think it’s worth speculating on M&A activity at the moment. There’s nothing of, immediate sort of action. We don’t comment on it in the base case anyway. But, it’s consistent with what we’ve been talking about over 2023, the full-year 2023, we are so focused on transforming our balance sheet, and we’ve done that. It’s complete. We mentioned it in the last quarter. We’re mentioning it again today. There’s nothing left to address there.
And so now, we’re a company, as any company should be focused on generating cash. As we generate cash, how we can allocate it and whether it’s external opportunities, internal opportunities or simply returning cash to shareholders. We’ve got a dedicated team analyzing all alternatives, as we go forward.
Neil Mehta: No, that’s helpful, Matt. And just a follow-up, just love your perspective on, how you’re seeing refining balances, particularly in the context of global refining, which was alluded to earlier, we’ve had two to three extraordinary years of margin. You see margins mean reverting or do you believe that this is a new structural normal?
Matthew C. Lucey: Well, it’s interesting. And I’ll ask Thomas O’Connor to make some comments. As I sit here today, I was looking at it, as of yesterday. If you look at ‘24 more cracks, the market for calendar ‘24, it actually looks very comparable to ‘23. I think there’s been discussions of reverting to the mean, and I’m not so sure, that we’re going to revert to the mean as quickly as some maybe we’re predicting. And obviously, there’s a very, very big difference from, where we were in ‘22 and even ‘23 to what the historical mean is. But the market is, set up very constructively, as I said. And over the last couple of years, I mean, a big thing has been the industry has been scented, to build inventory has really struggled in that regard.
And so here we sit 2023, and inventories are very, very tight. Yes, there’s going to be capacity that’s going to be coming on, but quite frankly, it’s needed as demand growth, for products worldwide will continue to grow. I would personally take the over on, that equipment coming on time, or, as expected. These are incredibly complex very large, additions in their own right, both in Mexico and Nigeria. And you’ve got, my experience perspective is I think that probably takes longer. Tom O’Connor, would you make any other comments?
