UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2017

Or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to             

Commission File Number: 333-186007

Commission File Number: 333-186007-07

PBF HOLDING COMPANY LLC

PBF FINANCE CORPORATION

(Exact name of registrant as specified in its charter)

DELAWARE DELAWARE	27-2198168 45-2685067
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
One Sylvan Way, Second Floor Parsippany, New Jersey	07054
(Address of principal executive offices)	(Zip Code)

(973) 455-7500

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.  

PBF Holding Company LLC	o  Yes    x  No
PBF Finance Corporation	o  Yes    x  No

(Note: As of January 1, 2017, each registrant was no longer subject to the filing requirements of Section 13 or 15(d) of the Exchange Act; however, each registrant filed all reports required to be filed during the period it was subject to Section 13 or 15(d) of the Exchange Act.)

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

PBF Holding Company LLC	x  Yes    o  No
PBF Finance Corporation	x  Yes    o  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

	Large accelerated filer	Accelerated filer	Non-accelerated filer (Do not check if a smaller reporting company)	Smaller reporting company	Emerging growth company
PBF Holding Company LLC	¨	¨	x	¨	o
PBF Finance Corporation	o	o	x	o	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

PBF Holding Company LLC	o  Yes    o  No
PBF Finance Corporation	o  Yes    o  No

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  

PBF Holding Company LLC	¨  Yes    x  No
PBF Finance Corporation	o  Yes    x  No

PBF Holding Company LLC has no common stock outstanding. As of August 8, 2017, 100% of the membership interests of PBF Holding Company LLC were owned by PBF Energy Company LLC, and PBF Finance Corporation had 100 shares of common stock outstanding, all of which were held by PBF Holding Company LLC.

PBF Finance Corporation meets the conditions set forth in General Instruction (H)(1)(a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format.

PBF HOLDING COMPANY LLC

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2017

TABLE OF CONTENTS

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS			3
PART I – FINANCIAL INFORMATION
	ITEM 1.	Financial Statements (Unaudited)
		Condensed Consolidated Balance Sheets as of June 30, 2017 and December 31, 2016	5
		Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2017 and 2016	6
		Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2017 and 2016	7
		Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2017 and 2016	8
		Notes to Condensed Consolidated Financial Statements	10
	ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	42
	ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	60
	ITEM 4.	Controls and Procedures	62
PART II – OTHER INFORMATION
	ITEM 1.	Legal Proceedings	63
	ITEM 6.	Exhibits	66
SIGNATURES			67

This Quarterly Report on Form 10-Q is filed by PBF Holding Company LLC (“PBF Holding”) and PBF Finance Corporation (“PBF Finance”). PBF Holding is a wholly-owned subsidiary of PBF Energy Company LLC (“PBF LLC”) and is the parent company for PBF LLC’s refinery operating subsidiaries. PBF Finance is a wholly-owned subsidiary of PBF Holding. PBF Holding is an indirect subsidiary of PBF Energy Inc. (“PBF Energy”), which is the sole managing member of, and owner of an equity interest representing approximately 96.6% of the outstanding economic interests in, PBF LLC as of June 30, 2017. PBF Energy operates and controls all of the business and affairs and consolidates the financial results of PBF LLC and its subsidiaries. PBF Holding, together with its consolidated subsidiaries, owns and operates oil refineries and related facilities in North America.

2

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains certain "forward-looking statements" of expected future developments that involve risks and uncertainties. You can identify forward-looking statements because they contain words such as "believes," "expects," "may," "should," "seeks," "approximately," "intends," "plans," "estimates," or "anticipates" or similar expressions that relate to our strategy, plans or intentions. All statements we make relating to our estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results or to our expectations regarding future industry trends are forward-looking statements. In addition, we, through our senior management, from time to time make forward-looking public statements concerning our expected future operations and performance and other developments. These forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, our actual results may differ materially from those that we expected. We derive many of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and, of course, it is impossible for us to anticipate all factors that could affect our actual results.

Important factors that could cause actual results to differ materially from our expectations, which we refer to as "cautionary statements," are disclosed under "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this Form 10-Q and the Annual Report on Form 10-K for the year ended December 31, 2016 of PBF Holding Company LLC and PBF Finance Corporation, which we refer to as our 2016 Annual Report on Form 10-K, and in our other filings with the SEC. All forward-looking information in this Quarterly Report on Form 10-Q and subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements. Some of the factors that we believe could affect our results include:

• supply, demand, prices and other market conditions for our products, including volatility in commodity prices;

•the effects of competition in our markets;

•changes in currency exchange rates, interest rates and capital costs;

•adverse developments in our relationship with both our key employees and unionized employees;

•our ability to operate our businesses efficiently, manage capital expenditures and costs (including general and administrative expenses) and generate earnings and cash flow;

•our substantial indebtedness;

•our supply and inventory intermediation arrangements expose us to counterparty credit and performance risk;

•termination of our A&R Intermediation Agreements with J. Aron, which could have a material adverse effect on our liquidity, as we would be required to finance our intermediate and refined products inventory covered by the agreements. Additionally, we are obligated to repurchase from J. Aron certain intermediates and finished products located at the Paulsboro and Delaware City refineries’ storage tanks upon termination of these agreements;

•restrictive covenants in our indebtedness that may adversely affect our operational flexibility or ability to make distributions;

•our assumptions regarding payments arising under PBF Energy’s tax receivable agreement and other arrangements relating to PBF Energy;

•our expectations and timing with respect to our acquisition activity;

•our expectations with respect to our capital improvement and turnaround projects;

•the status of an air permit to transfer crude through the Delaware City refinery’s dock;

3

•the impact of disruptions to crude or feedstock supply to any of our refineries, including disruptions due to problems at PBFX or with third party logistics infrastructure or operations, including pipeline, marine and rail transportation;

•the impact of current and future laws, rulings and governmental regulations, including the implementation of rules and regulations regarding transportation of crude oil by rail;

•the effectiveness of our crude oil sourcing strategies, including our crude by rail strategy and related commitments;

•adverse impacts related to legislation by the federal government lifting the restrictions on exporting U.S. crude oil;

•adverse impacts from changes in our regulatory environment, such as the effects of compliance with the California Global Warming Solutions Act (also referred to as “AB32”), or from actions taken by environmental interest groups;

•market risks related to the volatility in the price of Renewable Identification Numbers (“RINs”) required to comply with the Renewable Fuel Standards and greenhouse gas (“GHG”) emission credits required to comply with various GHG emission programs, such as AB32;

•our ability to successfully integrate the completed acquisition of the Torrance refinery and related logistics assets (collectively, the “Torrance Acquisition”) into our business and realize the benefits from such acquisition;

•liabilities arising from the Torrance Acquisition that are unforeseen or exceed our expectations; and

•any decisions we continue to make with respect to our energy-related logistical assets that may be transferred to PBFX.

We caution you that the foregoing list of important factors may not contain all of the material factors that are important to you. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this Quarterly Report on Form 10-Q may not in fact occur. Accordingly, investors should not place undue reliance on those statements.

Our forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by applicable law, including the securities laws of the United States, we do not intend to update or revise any forward-looking statements. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing.

4

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

PBF HOLDING COMPANY LLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)

	June 30, 2017			December 31, 2016
ASSETS
Current assets:
Cash and cash equivalents	$	114,019		$	626,705
Accounts receivable	609,760			615,881
Accounts receivable - affiliate	26,489			7,631
Affiliate notes receivable	11,600			—
Inventories	1,875,164			1,863,560
Prepaid expense and other current assets	58,370			40,536
Total current assets	2,695,402			3,154,313
Property, plant and equipment, net	2,793,029			2,728,699
Investment in equity method investee	174,047			179,882
Deferred charges and other assets, net	811,281			504,003
Total assets	$	6,473,759		$	6,566,897
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	437,640		$	530,365
Accounts payable - affiliate	31,409			37,863
Accrued expenses	1,594,300			1,462,729
Deferred revenue	4,932			12,340
Total current liabilities	2,068,281			2,043,297
Long-term debt	1,626,743			1,576,559
Affiliate notes payable	—			86,298
Deferred tax liabilities	50,822			45,699
Other long-term liabilities	223,106			226,111
Total liabilities	3,968,952			3,977,964
Commitments and contingencies (Note 9)
Equity:
Member’s equity	2,349,357			2,155,863
Retained earnings	167,868			446,519
Accumulated other comprehensive loss	(25,311		)	(25,962		)
Total PBF Holding Company LLC equity	2,491,914			2,576,420
Noncontrolling interest	12,893			12,513
Total equity	2,504,807			2,588,933
Total liabilities and equity	$	6,473,759		$	6,566,897

See notes to condensed consolidated financial statements.

5

PBF HOLDING COMPANY LLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands)

	Three Months Ended   June 30,						Six Months Ended   June 30,
	2017			2016			2017			2016
Revenues	$	5,013,251		$	3,855,773		$	9,763,449		$	6,655,958
Cost and expenses:
Cost of products and other	4,662,833			3,284,748			8,914,587			5,730,731
Operating expenses (excluding depreciation of $56,973, $47,333, $110,790 and $99,722 for the periods presented, respectively)	398,570			271,539			835,423			568,178
General and administrative expenses	34,920			38,091			75,399			71,360
Equity (income) loss in investee	(3,820		)	—			(7,419		)	—
Loss on sale of assets	29			3,222			912			3,222
Depreciation and amortization expense	62,993			48,919			118,683			103,212
	5,155,525			3,646,519			9,937,585			6,476,703
Income (loss) from operations	(142,274		)	209,254			(174,136		)	179,255
Other income (expenses):
Change in fair value of catalyst leases	1,104			(1,748		)	(1,484		)	(4,633		)
Debt extinguishment costs	(25,451		)	—			(25,451		)	—
Interest expense, net	(32,857		)	(31,279		)	(63,513		)	(64,550		)
Income (loss) before income taxes	(199,478		)	176,227			(264,584		)	110,072
Income tax expense (benefit)	5,898			(5,277		)	6,332			26,996
Net income (loss)	(205,376		)	181,504			(270,916		)	83,076
Less: net income attributable to noncontrolling interests	267			90			380			393
Net income (loss) attributable to PBF Holding Company LLC	$	(205,643	)	$	181,414		$	(271,296	)	$	82,683

See notes to condensed consolidated financial statements.

6

PBF HOLDING COMPANY LLC

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited, in thousands)

	Three Months Ended   June 30,					Six Months Ended   June 30,
	2017			2016		2017			2016
Net income (loss)	$	(205,376	)	$	181,504	$	(270,916	)	$	83,076
Other comprehensive income:
Unrealized gain on available for sale securities	43			99		77			405
Net gain on pension and other post-retirement benefits	287			316		574			632
Total other comprehensive income	330			415		651			1,037
Comprehensive income (loss)	(205,046		)	181,919		(270,265		)	84,113
Less: comprehensive income attributable to noncontrolling interests	267			90		380			393
Comprehensive income (loss) attributable to PBF Holding Company LLC	$	(205,313	)	$	181,829	$	(270,645	)	$	83,720

See notes to condensed consolidated financial statements.

7

PBF HOLDING COMPANY LLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

	Six Months Ended   June 30,
	2017			2016
Cash flows from operating activities:
Net income (loss)	$	(270,916	)	$	83,076
Adjustments to reconcile net income (loss) to net cash (used in) provided by operations:
Depreciation and amortization	122,849			107,945
Stock-based compensation	10,134			9,999
Change in fair value of catalyst leases	1,484			4,633
Deferred income taxes	5,123			27,060
Non-cash lower of cost or market inventory adjustment	167,134			(216,843		)
Non-cash change in inventory repurchase obligations	(3,107		)	26,172
Debt extinguishment costs	25,451			—
Pension and other post-retirement benefit costs	21,121			15,355
(Income) from equity method investee	(7,419		)	—
Distributions from equity method investee	12,254			—
Loss on sale of assets	912			3,222
Changes in operating assets and liabilities:
Accounts receivable	6,121			(190,645		)
Due to/from affiliates	(13,505		)	(2,457		)
Inventories	(178,738		)	82,579
Prepaid expense and other current assets	(18,038		)	(16,422		)
Accounts payable	(144,819		)	58,642
Accrued expenses	106,073			164,247
Deferred revenue	(7,408		)	3,767
Other assets and liabilities	(40,525		)	(12,522		)
Net cash (used in) provided by operations	(205,819		)	147,808
Cash flows from investing activities:
Expenditures for property, plant and equipment	(179,575		)	(110,035		)
Expenditures for deferred turnaround costs	(214,375		)	(106,649		)
Expenditures for other assets	(23,747		)	(21,325		)
Chalmette Acquisition working capital settlement	—			(2,659		)
Proceeds from sale of assets	—			6,860
Net cash used in investing activities	(417,697		)	(233,808		)

See notes to condensed consolidated financial statements.

8

PBF HOLDING COMPANY LLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(unaudited, in thousands)

Cash flows from financing activities:
Contributions from PBF LLC	$	97,000		$	—
Distributions to members	(5,252		)	(61,667		)
Proceeds from affiliate notes payable	—			635
Repayment of affiliate notes payable	—			(517		)
Proceeds from 2025 7.25% Senior Notes	725,000			—
Cash paid to extinguish 2020 8.25% Senior Secured Notes	(690,209		)	—
Repayments of PBF Rail Term Loan	(3,295		)	—
Repayments of Rail Facility revolver borrowings	—			(6,970		)
Proceeds from revolver borrowings	290,000			550,000
Repayments of revolver borrowings	(290,000		)	—
Deferred financing costs and other	(12,414		)	—
Net cash provided by financing activities	110,830			481,481
Net (decrease) increase in cash and cash equivalents	(512,686		)	395,481
Cash and cash equivalents, beginning of period	626,705			914,749
Cash and cash equivalents, end of period	$	114,019		$	1,310,230
Supplemental cash flow disclosures
Non-cash activities:
Distribution of assets to PBF Energy Company LLC	$	25,547		$	—
Accrued and unpaid capital expenditures	127,805			8,149
Conversion of affiliate notes payable to capital contribution	86,298			—

See notes to condensed consolidated financial statements.

9

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION

Description of the Business

PBF Holding Company LLC (“PBF Holding” or the “Company”), a Delaware limited liability company, together with its consolidated subsidiaries, owns and operates oil refineries and related facilities in North America. PBF Holding is a wholly-owned subsidiary of PBF Energy Company LLC (“PBF LLC”). PBF Energy Inc. (“PBF Energy”) is the sole managing member of, and owner of an equity interest representing approximately 96.6% of the outstanding economic interest in, PBF LLC as of June 30, 2017. PBF Investments LLC (“PBF Investments”), Toledo Refining Company LLC (“Toledo Refining” or “TRC”), Paulsboro Refining Company LLC (“Paulsboro Refining” or “PRC”), Delaware City Refining Company LLC (“Delaware City Refining” or “DCR”), Chalmette Refining, L.L.C. (“Chalmette Refining”), PBF Western Region LLC (“PBF Western Region”), Torrance Refining Company LLC (“Torrance Refining”) and Torrance Logistics Company LLC are PBF LLC’s principal operating subsidiaries and are all wholly-owned subsidiaries of PBF Holding. Collectively, PBF Holding and its consolidated subsidiaries are referred to hereinafter as the “Company”.

On May 14, 2014, PBF Logistics LP (“PBFX”), a Delaware master limited partnership, completed its initial public offering (the “PBFX Offering”). PBF Logistics GP LLC (“PBF GP”) serves as the general partner of PBFX. PBF GP is wholly-owned by PBF LLC. In connection with the PBFX Offering, PBF Holding contributed to PBFX the assets and liabilities of certain crude oil terminaling assets. In a series of additional transactions subsequent to the PBFX Offering, PBF Holding distributed certain additional assets to PBF LLC, which in turn contributed those assets to PBFX (as described in “Note 8 - Related Party Transactions”).

Substantially all of the Company’s operations are in the United States. As of June 30, 2017, the Company’s oil refineries are all engaged in the refining of crude oil and other feedstocks into petroleum products, and have been aggregated to form one reportable segment. To generate earnings and cash flows from operations, the Company is primarily dependent upon processing crude oil and selling refined petroleum products at margins sufficient to cover fixed and variable costs and other expenses. Crude oil and refined petroleum products are commodities; and factors largely out of the Company’s control can cause prices to vary over time. The potential margin volatility can have a material effect on the Company’s financial position, earnings and cash flow.

Basis of Presentation

The unaudited condensed consolidated financial information furnished herein reflects all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, considered necessary for a fair presentation of the financial position and the results of operations and cash flows of the Company for the periods presented. All intercompany accounts and transactions have been eliminated in consolidation. These unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. These interim condensed consolidated financial statements should be read in conjunction with the financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2016 of PBF Holding Company LLC and PBF Finance Corporation. The results of operations for the three and six months ended June 30, 2017 are not necessarily indicative of the results to be expected for the full year.

Cost Classifications

Cost of products and other consists of the cost of crude oil, other feedstocks, blendstocks and purchased refined products and the related in-bound freight and transportation costs.

Operating expenses (excluding depreciation) consists of direct costs of labor, maintenance and services, utilities, property taxes, environmental compliance costs and other direct operating costs incurred in connection with our refining operations. Such expenses exclude depreciation related to refining and logistics assets that are integral to

10

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

the refinery production process, which is presented as a component of Depreciation and amortization expense on our Condensed Consolidated Statement of Operations.

Reclassification

Certain amounts previously reported in the Company's condensed consolidated financial statements for prior periods have been reclassified to conform to the 2017 presentation. These reclassifications include certain details about accrued expenses in that footnote.

Recently Adopted Accounting Guidance

Effective January 1, 2017, the Company adopted Accounting Standard Update (“ASU”) No. 2016-06, “Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments (a consensus of the FASB Emerging Issues Task Force)” (“ASU 2016-06”). ASU 2016-6 was issued in March 2016 by the Financial Accounting Standards Board (“FASB”) to increase consistency in practice in applying guidance on determining if an embedded derivative is clearly and closely related to the economic characteristics of the host contract, specifically for assessing whether call (put) options that can accelerate the repayment of principal on a debt instrument meet the clearly and closely related criterion. The Company’s adoption of this guidance did not materially impact its consolidated financial statements.

Effective January 1, 2017, the Company adopted ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). ASU 2016-09 was issued by the FASB in March 2016 to simplify certain aspects of the accounting for share-based payments to employees. The guidance in ASU 2016-09 requires all income tax effects of awards to be recognized in the income statement when the awards vest or are settled rather than recording excess tax benefits or deficiencies in additional paid-in capital. The guidance in ASU 2016-09 also allows an employer to repurchase more of an employee’s shares than it could prior to its adoption for tax withholding purposes without triggering liability accounting and to make a policy election to account for forfeitures as they occur. The Company’s adoption of this guidance did not materially impact its consolidated financial statements.

Effective January 1, 2017, the Company adopted ASU No. 2016-17, “Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control” (“ASU 2016-17”). ASU 2016-17 was issued by the FASB in October 2016 to amend the consolidation guidance on how a reporting entity that is the single decision maker of a variable interest entity (“VIE”) should treat indirect interests in the entity held through related parties that are under common control with the reporting entity when determining whether it is the primary beneficiary of that VIE. The amendments in this ASU do not change the characteristics of a primary beneficiary in current GAAP. The amendments in this ASU require that a reporting entity, in determining whether it satisfies the second characteristic of a primary beneficiary, include all of its direct variable interests in a VIE and, on a proportionate basis, its indirect variable interests in a VIE held through related parties, including related parties that are under common control with the reporting entity. The Company’s adoption of this guidance did not materially impact its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business” (“ASU 2017-01”), which provides guidance to assist entities with evaluating when a set of transferred assets and activities is a business. Under ASU 2017-01, it is expected that the definition of a business will be narrowed and more consistently applied. ASU 2017-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The amendments in this ASU should be applied prospectively on or after the effective date. Early adoption of ASU 2017-01 is permitted and the Company early adopted the new standard in its consolidated financial statements and related disclosures effective January 1, 2017. The Company’s adoption of this guidance did not materially impact its consolidated financial statements.

Recent Accounting Pronouncements

In August 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date” (“ASU 2015-14”), which defers the effective date of ASU 2014-09, “Revenue from

11

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

Contracts with Customers” (“ASU 2014-09”) for all entities by one year. Additional ASUs have been issued in 2016 that provide certain implementation guidance related to ASU 2014-09 (collectively, the Company refers to ASU 2014-09 and these additional ASUs as the “Updated Revenue Recognition Guidance”). The Updated Revenue Recognition Guidance will replace most existing revenue recognition guidance in GAAP when it becomes effective. Under ASU 2015-14, this guidance becomes effective for interim and annual periods beginning after December 15, 2017 and permits the use of either the retrospective or modified retrospective transition method. Under ASU 2015-14, early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company has established a working group to assess the Updated Revenue Recognition Guidance, including its impact on the Company’s business processes, accounting systems, controls and financial statement disclosures. The Company’s preliminary expectation is that it will adopt this guidance using the modified retrospective method whereby a cumulative effect adjustment is recognized upon adoption and the Updated Revenue Recognition Guidance is applied prospectively. The Company will not early adopt this new guidance. The working group is progressing through its implementation plan and continues to evaluate the impact of this new standard on the Company’s consolidated financial statements and related disclosures. Although the Company’s analysis of the new standard is still in process and interpretative and industry specific guidance is still developing, the Company currently does not expect the new standard to have a material impact on the amount or timing of revenues recognized for the majority of its revenue arrangements. However, it is expected that the new standard will have some impact on presentation and disclosures in its financial statements.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), to increase the transparency and comparability about leases among entities. The new guidance requires lessees to recognize a lease liability and a corresponding lease asset for virtually all lease contracts.  It also requires additional disclosures about leasing arrangements. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018, and requires a modified retrospective approach to adoption. Early adoption is permitted. The Company has established a working group to study and lead implementation of the new guidance in ASU 2016-02. This working group was formed during 2016 and has begun the process of compiling a central repository for all leases entered into by the Company and its subsidiaries for further analysis as the implementation project progresses. It is not anticipated that the Company will early adopt this new guidance. The working group continues to evaluate the impact of this new standard on its consolidated financial statements and related disclosures. At this time, the Company has identified that the most significant impacts of this new guidance will be to bring nearly all leases on its balance sheet with “right of use assets” and “lease obligation liabilities” as well as accelerating the interest expense component of financing leases. While the assessment of the impacts arising from this standard is progressing, it remains in its early stages. Accordingly, the Company has not fully determined the impacts on its business processes, controls or financial statement disclosures.

In March 2017, the FASB issued ASU No. 2017-07, “Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” (“ASU 2017-07”), which provides guidance to improve the reporting of net benefit cost in the income statement and on the components eligible for capitalization in assets. Under the new guidance, employers will present the service cost component of net periodic benefit cost in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period. Only the service cost component will be eligible for capitalization in assets. Additionally, under this guidance, employers will present the other components of the net periodic benefit cost separately from the line item(s) that includes the service cost and outside of any subtotal of operating income, if one is presented. These components will not be eligible for capitalization in assets. Employers will apply the guidance on the presentation of the components of net periodic benefit cost in the income statement retrospectively. The guidance limiting the capitalization of net periodic benefit cost in assets to the service cost component will be applied prospectively. The guidance includes a practical expedient allowing entities to estimate amounts for comparative periods using the information previously disclosed in their pension and other postretirement benefit plan note to the financial statements. The amendments in this ASU are effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. The Company is currently evaluating the impact of this new standard on its consolidated financial statements and related disclosures.

12

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

In May 2017, the FASB issued ASU No. 2017-09, “Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting” (“ASU 2017-09”), which provides guidance to increase clarity and reduce both diversity in practice and cost and complexity when applying the existing accounting guidance on changes to the terms or conditions of a share-based payment award. The amendments in ASU 2017-09 require an entity to account for the effects of a modification unless all the following are met: (i) the fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified; (ii) the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and (iii) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The guidance in ASU 2017-09 should be applied prospectively. The amendments in this ASU are effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. The Company will apply the guidance prospectively for any modifications to its stock compensation plans occurring after the effective date of the new standard.

2. ACQUISITIONS

Torrance Acquisition

On July 1, 2016, the Company acquired from ExxonMobil Oil Corporation and its subsidiary, Mobil Pacific Pipe Line Company, the Torrance refinery and related logistics assets (collectively, the “Torrance Acquisition”). The Torrance refinery, located in Torrance, California, is a high-conversion, delayed-coking refinery. The facility is strategically positioned in Southern California with advantaged logistics connectivity that offers flexible raw material sourcing and product distribution opportunities primarily in the California, Las Vegas and Phoenix area markets. The Torrance Acquisition provided the Company with a broader more diversified asset base and increased the number of operating refineries from four to five and expanded the Company’s combined crude oil throughput capacity. The acquisition also provided the Company with a presence in the PADD 5 market.

In addition to refining assets, the transaction included a number of high-quality logistics assets including a sophisticated network of crude and products pipelines, product distribution terminals and refinery crude and product storage facilities. The most significant of the logistics assets is a crude gathering and transportation system which delivers San Joaquin Valley crude oil directly from the field to the refinery. Additionally, included in the transaction were several pipelines which provide access to sources of crude oil including the Ports of Long Beach and Los Angeles, as well as clean product outlets with a direct pipeline supplying jet fuel to the Los Angeles airport.

The aggregate purchase price for the Torrance Acquisition was $521,350 in cash after post-closing purchase price adjustments, plus final working capital of $450,582. In addition, the Company assumed certain pre-existing environmental and regulatory emission credit obligations in connection with the Torrance Acquisition. The transaction was financed through a combination of cash on hand, including proceeds from certain PBF Energy equity offerings and borrowings under the Company’s asset based revolving credit agreement (the “Revolving Loan”).

The Company accounted for the Torrance Acquisition as a business combination under GAAP whereby the Company recognizes assets acquired and liabilities assumed in an acquisition at their estimated fair values as of the date of acquisition. The final purchase price and fair value allocation were completed as of June 30, 2017. During the measurement period, which ended in June 2017, adjustments were made to the Company’s preliminary fair value estimates related primarily to Property, plant and equipment and Other long-term liabilities reflecting the finalization of the Company’s assessment of the costs and duration of certain assumed pre-existing environmental obligations.

13

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

The total purchase consideration and the fair values of the assets and liabilities at the acquisition date were as follows:

	Purchase Price
Gross purchase price	$	537,500
Working capital	450,582
Post close purchase price adjustments	(16,150		)
Total consideration	$	971,932

The following table summarizes the amounts recognized for assets acquired and liabilities assumed as of the acquisition date:

	Fair Value Allocation
Inventories	$	404,542
Prepaid expenses and other current assets	982
Property, plant and equipment	704,633
Deferred charges and other assets, net	68,053
Accounts payable	(2,688		)
Accrued expenses	(64,137		)
Other long-term liabilities	(139,453		)
Fair value of net assets acquired	$	971,932

The Company’s condensed consolidated financial statements for the six months ended June 30, 2017 include the results of operations of the Torrance refinery and related logistics assets subsequent to the Torrance Acquisition whereas the same period in 2016 does not include the results of operations of such assets. On an unaudited pro forma basis, the revenues and net income of the Company assuming the Torrance Acquisition had occurred on January 1, 2015, are shown below. The unaudited pro forma information does not purport to present what the Company’s actual results would have been had the acquisition occurred on January 1, 2015, nor is the financial information indicative of the results of future operations. The unaudited pro forma financial information includes the depreciation and amortization expense attributable to the Torrance Acquisition and interest expense associated with the related financing.

	Six Months Ended June 30, 2016
Pro forma revenues	$	7,734,969
Pro forma net loss attributable to PBF Holding Company LLC	$	(121,369	)

The unaudited amount of revenues and net loss above have been calculated after conforming accounting policies of the Torrance refinery and related logistics assets to those of the Company and certain one-time adjustments.

Chalmette Acquisition

On November 1, 2015, the Company acquired from ExxonMobil, Mobil Pipe Line Company and PDV Chalmette, L.L.C., 100% of the ownership interests of Chalmette Refining, which owns the Chalmette refinery and related logistics assets (collectively, the “Chalmette Acquisition”). While the Company’s condensed consolidated financial statements for both the three and six months ended June 30, 2017 and 2016 include the results of operations of Chalmette Refining, the final working capital settlement for the Chalmette Acquisition was finalized in the first quarter of 2016. Additionally, certain acquisition related costs for the Chalmette Acquisition were recorded in the first quarter of 2016.

14

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

Acquisition Expenses

The Company incurred acquisition related costs consisting primarily of consulting and legal expenses related to completed, pending and non-consummated acquisitions of $94 and $466 in the three and six months ended June 30, 2017, respectively. In the three and six months ended June 30, 2016, the Company incurred acquisition related costs of $2,410 and $7,134 respectively. These costs are included in the condensed consolidated statements of operations in General and administrative expenses.

3. INVENTORIES

Inventories consisted of the following:

June 30, 2017
	Titled Inventory			Inventory Intermediation Arrangements			Total
Crude oil and feedstocks	$	1,307,816		$	—		$	1,307,816
Refined products and blendstocks	935,041			300,939			1,235,980
Warehouse stock and other	94,490			—			94,490
	$	2,337,347		$	300,939		$	2,638,286
Lower of cost or market adjustment	(650,702		)	(112,420		)	(763,122		)
Total inventories	$	1,686,645		$	188,519		$	1,875,164

December 31, 2016
	Titled Inventory			Inventory Intermediation Arrangements			Total
Crude oil and feedstocks	$	1,102,007		$	—		$	1,102,007
Refined products and blendstocks	915,397			352,464			1,267,861
Warehouse stock and other	89,680			—			89,680
	$	2,107,084		$	352,464		$	2,459,548
Lower of cost or market adjustment	(492,415		)	(103,573		)	(595,988		)
Total inventories	$	1,614,669		$	248,891		$	1,863,560

Inventory under inventory intermediation arrangements included certain light finished products sold to counterparties and stored in the Paulsboro and Delaware City refineries’ storage facilities in connection with the amended and restated inventory intermediation agreements (as amended in the second quarter of 2017, the “A&R Intermediation Agreements”) with J. Aron & Company, a subsidiary of The Goldman Sachs Group, Inc. (“J. Aron”).

During the three months ended June 30, 2017, the Company recorded an adjustment to value its inventories to the lower of cost or market (“LCM”) which decreased both operating income and net income by $151,095 reflecting the net change in the lower of cost or market inventory reserve from $612,027 at March 31, 2017 to $763,122 at June 30, 2017. During the six months ended June 30, 2017, the Company recorded an adjustment to value its inventories to the lower of cost or market which decreased both operating income and net income by $167,134 reflecting the net change in the lower of cost or market inventory reserve from $595,988 at December 31, 2016 to $763,122 at June 30, 2017.

During the three months ended June 30, 2016, the Company recorded an adjustment to value its inventories to the lower of cost or market which increased both operating income and net income by $157,780 reflecting the net change in the lower of cost or market inventory reserve from $1,058,273 at March 31, 2016 to $900,493 at June 30, 2016. During the six months ended June 30, 2016, the Company recorded an adjustment to value its inventories

15

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

to the lower of cost or market which increased both operating income and net income by $216,843 reflecting the net change in the lower of cost or market inventory reserve from $1,117,336 at December 31, 2015 to $900,493 at June 30, 2016.

4. ACCRUED EXPENSES

Accrued expenses consisted of the following:

	June 30, 2017		December 31, 2016
Inventory-related accruals	$	778,746	$	810,027
Inventory intermediation arrangements	233,455		225,524
Renewable energy credit and emissions obligations	172,331		70,158
Excise and sales tax payable	100,998		86,046
Accrued transportation costs	83,312		89,830
Accrued capital expenditures	75,711		33,610
Accrued refinery maintenance and support costs	32,326		28,670
Accrued utilities	28,914		44,190
Customer deposits	23,912		9,215
Accrued salaries and benefits	15,961		17,466
Accrued interest	9,047		28,934
Environmental liabilities	8,902		8,882
Other	30,685		10,177
Total accrued expenses	$	1,594,300	$	1,462,729

The Company has the obligation to repurchase certain intermediates and finished products that are held in the Company’s refinery storage tanks at the Delaware City and Paulsboro refineries in accordance with the A&R Intermediation Agreements with J. Aron. As of June 30, 2017 and December 31, 2016, a liability is recognized for the inventory intermediation arrangements and is recorded at market price for the J. Aron owned inventory held in the Company’s storage tanks under the A&R Inventory Intermediation Agreements, with any change in the market price being recorded in Cost of products and other.

The Company is subject to obligations to purchase Renewable Identification Numbers (“RINs”) required to comply with the Renewable Fuels Standard. The Company’s overall RINs obligation is based on a percentage of domestic shipments of on-road fuels as established by the Environmental Protection Agency (“EPA”). To the degree the Company is unable to blend the required amount of biofuels to satisfy its RINs obligation, RINs must be purchased on the open market to avoid penalties and fines. The Company records its RINs obligation on a net basis in Accrued expenses when its RINs liability is greater than the amount of RINs earned and purchased in a given period and in Prepaid expenses and other current assets when the amount of RINs earned and purchased is greater than the RINs liability. In addition, the Company is subject to obligations to comply with federal and state legislative and regulatory measures to address environmental compliance and greenhouse gas and other emissions, including AB32 in California. These requirements include incremental costs to operate and maintain our facilities as well as to implement and manage new emission controls and programs, which have contributed to the increase in accrued environmental liabilities and emission obligations following the Torrance Acquisition. Renewable energy credit and emissions obligations fluctuate with the volume of applicable product sales and timing of credit purchases.

16

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

5. LONG-TERM DEBT

Senior Notes

On May 30, 2017, PBF Holding entered into an Indenture (the “Indenture”) among PBF Holding and PBF Holding’s wholly-owned subsidiary, PBF Finance Corporation (“PBF Finance” and, together with PBF Holding, the “Issuers”), the guarantors named therein (collectively the “Guarantors”) and Wilmington Trust, National Association, as Trustee, under which the Issuers issued $725,000 in aggregate principal amount of 7.25% senior notes due 2025 (the “2025 Senior Notes”). The Issuers received net proceeds of approximately $712,586 from the offering after deducting the initial purchasers’ discount and estimated offering expenses. The Company used the net proceeds to fund the cash tender offer (the “Tender Offer”) for any and all of its outstanding 8.25% senior secured notes due 2020 (the “2020 Senior Secured Notes”), to pay the related redemption price and accrued and unpaid interest for any 2020 Senior Secured Notes that remained outstanding after the completion of the Tender Offer, and for general corporate purposes. The difference between the carrying value of the 2020 Senior Secured Notes on the date they were reacquired and the amount for which they were reacquired has been classified as debt extinguishment costs in the condensed consolidated statement of operations.

The 2025 Senior Notes include a registration payment arrangement whereby the Company has agreed to file with the SEC and use reasonable efforts to cause to become effective within 365 days of the closing date, a registration statement relating to an offer to exchange the 2025 Senior Notes for an issue of registered notes with terms substantially identical to the notes. The Issuers will be obligated to pay additional interest if they fail to comply with their obligations to register the 2025 Senior Notes within the specified time period. The Company fully intends to file a registration statement for the exchange of the 2025 Senior Notes within the 365 day period following the closing of the 2025 Senior Notes. In addition, there are no restrictions or hindrances that the Company is aware of that would prohibit the Issuers from filing such registration statement and maintaining its effectiveness as stipulated in the registration rights agreement. As such, the Company asserts that it is not probable that it will have to transfer any consideration as a result of the registration rights agreement and thus no loss contingency was recorded.

The 2025 Senior Notes are guaranteed on a senior unsecured basis by substantially all of PBF Holding’s subsidiaries. The 2025 Senior Notes and guarantees are senior unsecured obligations and rank equal in right of payment with all of the Issuers’ and the Guarantors’ existing and future senior indebtedness, including PBF Holding’s Revolving Loan and the Issuers’ 7.00% senior notes due 2023 (the “2023 Senior Notes”). The 2025 Senior Notes and the guarantees rank senior in right of payment to the Issuers’ and the Guarantors’ existing and future indebtedness that is expressly subordinated in right of payment thereto. The 2025 Senior Notes and the guarantees are effectively subordinated to any of the Issuers’ and the Guarantors’ existing or future secured indebtedness (including the Revolving Loan) to the extent of the value of the collateral securing such indebtedness. The 2025 Senior Notes and the guarantees are structurally subordinated to any existing or future indebtedness and other obligations of the Issuers’ non-guarantor subsidiaries.

PBF Holding has optional redemption rights to repurchase all or a portion of the 2025 Senior Notes at varying prices no less than 100% of the principal amounts of the notes plus accrued and unpaid interest. The holders of the 2025 Senior Notes have repurchase options exercisable only upon a change in control, certain asset sale transactions, or in event of a default as defined in the Indenture. In addition, the 2025 Senior Notes contain customary terms, events of default and covenants for an issuer of non-investment grade debt securities that limit certain types of additional debt, equity issuances, and payments. Many of these covenants will cease to apply or will be modified if the 2025 Senior Notes are rated investment grade.

Upon the satisfaction and discharge of the 2020 Senior Secured Notes in connection with the closing of the Tender Offer and the redemption described above, a Collateral Fall-Away Event under the indenture governing the 2023 Senior Notes occurred on May 30, 2017, and the 2023 Senior Notes became unsecured and certain covenants were modified, as provided for in the indenture governing the 2023 Senior Notes and related documents.

17

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

6. INCOME TAXES

PBF Holding is a limited liability company treated as a “flow-through” entity for income tax purposes. Accordingly, there is generally no benefit or provision for federal or state income tax in the PBF Holding financial statements apart from the income tax attributable to two subsidiaries acquired in connection with the acquisition of Chalmette Refining and the Company’s wholly-owned Canadian subsidiary, PBF Energy Limited (“PBF Ltd.”). The two subsidiaries acquired in connection with the Chalmette Acquisition are treated as C-Corporations for income tax purposes.

The income tax provision (benefit) in the PBF Holding condensed consolidated financial statements of operations consists of the following:

	Three Months Ended   June 30,					Six Months Ended   June 30,
	2017		2016			2017		2016
Current tax expense (benefit)	$	737	$	299		$	1,209	$	(64	)
Deferred tax expense (benefit)	5,161		(5,576		)	5,123		27,060
Total tax expense (benefit)	$	5,898	$	(5,277	)	$	6,332	$	26,996

During the preparation of the financial statements for the first quarter of 2016, management determined that the deferred income tax liabilities for PBF Ltd. were understated for prior periods. For the three months ended March 31, 2016, the Company incurred $30,602 of deferred tax expense and $121 of current tax expense relating to a correction of prior periods.

7. AFFILIATE NOTES PAYABLE

PBF Holding has entered into affiliate notes payable with PBF Energy and PBF LLC with an interest rate of 2.5% and a five year term, which may be prepaid in whole or in part at any time, at the option of PBF Holding, without penalty or premium. Additional borrowings may be made by PBF Holding under such affiliate notes payable from time to time. In the fourth quarter of 2016, the notes were extended to 2021. Additionally, in the fourth quarter of 2016, PBF LLC converted $379,947 of the outstanding affiliate notes payable from PBF Holding to a capital contribution. In the first quarter of 2017, PBF LLC converted the full amount of outstanding affiliate notes payable from PBF Holding of $86,298 to a capital contribution. Therefore, as of June 30, 2017, PBF Holding had no outstanding affiliate notes payable with PBF Energy and PBF LLC ($86,298 outstanding as of December 31, 2016).

8. RELATED PARTY TRANSACTIONS

Transactions and Agreements with PBFX

PBF Holding entered into agreements with PBFX that establish fees for certain general and administrative services, and operational and maintenance services provided by the Company to PBFX. In addition, the Company executed terminal, pipeline and storage services agreements with PBFX under which PBFX provides commercial transportation, terminaling, storage and pipeline services to the Company. These agreements with PBFX include the agreements set forth below:

Contribution Agreements

Immediately prior to the closing of certain contribution agreements, which PBF LLC entered into with PBFX (collectively referred to as the “Contribution Agreements”), PBF Holding contributed certain assets to PBF LLC. PBF LLC in turn contributed those assets to PBFX pursuant to the Contribution Agreements. Certain proceeds received by PBF LLC from PBFX in accordance with the Contribution Agreements were subsequently contributed by PBF LLC to PBF Holding.

18

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

Pursuant to a Contribution Agreement entered into on February 15, 2017, PBF Holding contributed all of the issued and outstanding limited liability company interests of Paulsboro Natural Gas Pipeline Company LLC (“PNGPC”) to PBF LLC. PBFX Operating Company LP (“PBFX Op Co”), PBFX’s wholly-owned subsidiary, in turn acquired the limited liability company interests in PNGPC from PBF LLC in connection with the Contribution Agreement effective February 28, 2017. PNGPC owns and operates an existing interstate natural gas pipeline which serves PBF Holding's Paulsboro refinery (the “Paulsboro Natural Gas Pipeline”), which is subject to regulation by the Federal Energy Regulatory Commission (“FERC”). PNGPC has FERC approval for, and is in the process of constructing, a new pipeline (the “New Pipeline”) to replace the existing pipeline, which was placed in service in August 2017.

In consideration for the PNGPC limited liability company interests, PBFX delivered to PBF LLC (i) an $11,600 intercompany promissory note in favor of Paulsboro Refining Company LLC, a wholly owned subsidiary of PBF Holding (the “Promissory Note”), (ii) an expansion rights and right of first refusal agreement in favor of PBF LLC with respect to the New Pipeline and (iii) an assignment and assumption agreement with respect to certain outstanding litigation involving PNGPC and the existing pipeline.

Commercial Agreements

In connection with the Contribution Agreements, PBF Holding entered into long-term, fee-based commercial agreements with PBFX. Under these agreements, PBFX provides various pipeline, rail and truck terminaling and storage services to PBF Holding and PBF Holding has committed to provide PBFX with minimum fees based on minimum monthly throughput volumes. The fees under each of these agreements are supported by contractual fee escalations for inflation adjustments and certain increases in operating costs. PBF Holding believes the terms and conditions under these agreements, as well as the Omnibus Agreement (as defined below) and the Services Agreement (as defined below) each with PBFX, are generally no less favorable to either party than those that could have been negotiated with unaffiliated parties with respect to similar services.

These commercial agreements (as defined in the table below) with PBFX include:

19

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

Service Agreements	Initiation Date	Initial Term	Renewals (a)	Minimum Volume Commitments	Force Majeure
Transportation and Terminaling
Delaware City Rail Terminaling Services Agreement	5/8/2014	7 years, 8 months	2 x 5	85,000 bpd	PBFX or PBF Holding can declare
Toledo Truck Unloading & Terminaling Services Agreement	5/8/2014	7 years, 8 months	2 x 5	5,500 bpd
Delaware West Ladder Rack Terminaling Services Agreement	10/1/2014	7 years, 3 months	2 x 5	40,000 bpd
Toledo Storage Facility Storage and Terminaling Services Agreement- Terminaling Facility	12/12/2014	10 years	2 x 5	4,400 bpd
Delaware Pipeline Services Agreement	5/15/2015	10 years, 8 months	2 x 5	50,000 bpd
Delaware Pipeline Services Agreement- Magellan Connection	11/1/2016	2 years, 5 months	N/A	14,500 bpd
Delaware City Truck Loading Services Agreement- Gasoline	5/15/2015	10 years, 8 months	2 x 5	30,000 bpd
Delaware City Truck Loading Services Agreement- LPGs	5/15/2015	10 years, 8 months	2 x 5	5,000 bpd
East Coast Terminals Terminaling Services Agreements	5/1/2016	Various (f)	Evergreen	15,000 bpd (e)
East Coast Terminals Tank Lease Agreements	5/1/2016	Various (f)	Evergreen	350,000 barrels (c)
Torrance Valley Pipeline Transportation Services Agreement- North Pipeline	8/31/2016	10 years	2 x 5	50,000 bpd
Torrance Valley Pipeline Transportation Services Agreement- South Pipeline	8/31/2016	10 years	2 x 5	70,000 bpd
Torrance Valley Pipeline Transportation Services Agreement- Midway Storage Tank	8/31/2016	10 years	2 x 5	55,000 barrels (c)
Torrance Valley Pipeline Transportation Services Agreement- Emidio Storage Tank	8/31/2016	10 years	2 x 5	900,000 barrels per month
Torrance Valley Pipeline Transportation Services Agreement- Belridge Storage Tank	8/31/2016	10 years	2 x 5	770,000 barrels per month
Paulsboro Natural Gas Pipeline Services Agreement (b)	9/1/2011	15 years	Evergreen	N/A
Toledo Terminal Services Agreement (g)	5/1/2016	1 year	Evergreen	N/A
Storage
Toledo Storage Facility Storage and Terminaling Services Agreement- Storage Facility	12/12/2014	10 years	2 x 5	3,849,271 barrels (c)	PBFX or PBF Holding can declare
Chalmette Storage Agreement (d)	See note (d)	10 years	2 x 5	625,000 barrels

____________________

(a) PBF Holding has the option to extend the agreements for up to two additional five-year terms, as applicable, in the table above.

20

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

(b) In connection with the PNGPC Contribution Agreement, PBFX assumed the current commercial transportation agreement between PNGPC and the Paulsboro refinery. Subsequent to the completion of the New Pipeline, PBF Holding will enter into a new transportation agreement with PBFX.

(c) Reflects the overall capacity of the storage facility. The storage minimum volume commitment (“MVC”) is subject to effective operating capacity of each tank which can be impacted by routine tank maintenance and other factors.

(d) The Chalmette Storage Agreement was entered into on February 15, 2017 but commences at the earlier of November 1, 2017 or the completion of the Chalmette Storage Tank construction (as defined below).

(e) The East Coast Terminals terminaling service agreements have no MVCs and are billed based on actual volumes throughput, other than a terminaling services agreement between the East Coast Terminals' Paulsboro, New Jersey location and PBF Holding with a 15,000 bpd MVC.

(f) The East Coast Terminal related party agreements include varying term lengths, ranging from one to five years.

(g) Subsequent to the Toledo Terminal Acquisition, the Toledo Terminal was added to the East Coast Terminals Terminaling Service Agreements.

Other Agreements

In addition to the commercial agreements described above, at the closing of the PBFX Offering, PBFX entered into an omnibus agreement, which has been amended and restated in connection with the closing of each of the contribution agreements with PBF GP, PBF LLC and PBF Holding (as amended, the “Omnibus Agreement”). The Omnibus Agreement addresses the payment of an annual fee for the provision of various general and administrative services and reimbursement of salary and benefit costs for certain PBF Energy employees. The annual fee was increased to $6,900 per year effective as of January 1, 2017.

In connection with the PBFX Offering, PBFX also entered into an operation and management services and secondment agreement with PBF Holding and certain of its subsidiaries, pursuant to which PBF Holding and its subsidiaries provide PBFX with the personnel necessary for PBFX to perform its obligations under its commercial agreements. PBFX reimburses PBF Holding for the use of such employees and the provision of certain infrastructure-related services to the extent applicable to its operations, including storm water discharge and waste water treatment, steam, potable water, access to certain roads and grounds, sanitary sewer access, electrical power, emergency response, filter press, fuel gas, API solids treatment, fire water and compressed air. On February 28, 2017, PBF Holding and PBFX entered into a fifth amended and restated services agreement (as amended, the “Services Agreement”) in connection with the PNGPC Contribution Agreement, resulting in an increase to the annual fee to $6,696. The Services Agreement will terminate upon the termination of the Omnibus Agreement, provided that PBFX may terminate any service on 30 days’ notice.

In connection with the Chalmette Storage Agreement, PBF Holding’s subsidiary, Chalmette Refining, entered into a twenty-year lease for the premises upon which a new tank at the Chalmette refinery (the “Chalmette Storage Tank”) will be located (the “Lease”) and a project management agreement (the “Project Management Agreement”) pursuant to which Chalmette Refining will manage the construction of the tank. The Lease can be extended by PBFX Op Co for two additional ten year terms.

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PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

Summary of Transactions with PBFX

A summary of revenue and expense transactions with PBFX is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Revenues under affiliate agreements:
Services Agreement	$	1,661	$	1,121	$	3,279	$	2,243
Omnibus Agreement	1,630		1,415		3,284		2,259
Total expenses under affiliate agreements	58,355		37,965		114,557		74,514

9. COMMITMENTS AND CONTINGENCIES

Environmental Matters

The Company’s refineries, pipelines and related operations are subject to extensive and frequently changing federal, state and local laws and regulations, including, but not limited to, those relating to the discharge of materials into the environment or that otherwise relate to the protection of the environment, waste management and the characteristics and the compositions of fuels. Compliance with existing and anticipated laws and regulations can increase the overall cost of operating the refineries, including remediation, operating costs and capital costs to construct, maintain and upgrade equipment and facilities.

In connection with the Paulsboro refinery acquisition, the Company assumed certain environmental remediation obligations. The Paulsboro environmental liability of $11,117 recorded as of June 30, 2017 ($10,792 as of December 31, 2016) represents the present value of expected future costs discounted at a rate of 8.0%. The current portion of the environmental liability is recorded in Accrued expenses and the non-current portion is recorded in Other long-term liabilities. This liability is self-guaranteed by the Company.

In connection with the acquisition of the Delaware City assets, Valero Energy Corporation (“Valero”) remains responsible for certain pre-acquisition environmental obligations up to $20,000 and the predecessor to Valero in ownership of the refinery retains other historical obligations.

In connection with the acquisition of the Delaware City assets and the Paulsboro refinery, the Company and Valero purchased ten year, $75,000 environmental insurance policies to insure against unknown environmental liabilities at each site. In connection with the Toledo refinery acquisition, Sunoco, Inc. (R&M) (“Sunoco”) remains responsible for environmental remediation for conditions that existed on the closing date for twenty years from March 1, 2011, subject to certain limitations.

In connection with the acquisition of the Chalmette refinery, the Company obtained $3,936 in financial assurance (in the form of a surety bond) to cover estimated potential site remediation costs associated with an agreed to Administrative Order of Consent with the EPA. The estimated cost assumes remedial activities will continue for a minimum of 30 years. Further, in connection with the acquisition of the Chalmette refinery, the Company purchased a ten year, $100,000 environmental insurance policy to insure against unknown environmental liabilities at the refinery.

As of November 1, 2015, the Company acquired Chalmette Refining, which was in discussions with the Louisiana Department of Environmental Quality (“LDEQ”) to resolve self-reported deviations from refinery operations relating to certain Clean Air Act Title V permit conditions, limits and other requirements. LDEQ commenced an enforcement action against Chalmette Refining on November 14, 2014 by issuing a Consolidated Compliance Order and Notice of Potential Penalty (the “Order”) covering deviations from 2009 and 2010. Chalmette Refining and LDEQ subsequently entered into a dispute resolution agreement, the enforcement of which has been suspended while negotiations are ongoing, which may include the resolution of deviations outside the periods covered by the Order. In February 2017, Chalmette Refining and the LDEQ met to resolve the issues under the Order, including

22

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

the assessment of an administrative penalty against Chalmette Refining. Although a resolution has not been finalized, the administrative penalty is anticipated to be approximately $700, including beneficial environmental projects. To the extent the administrative penalty exceeds such amount, it is not expected to be material to the Company.

On January 24, 2017, in connection with a Clean Air Act inspection in May 2014 by the EPA to determine compliance with 40 CFR Subpart 68 Chemical Accident Prevention Provisions, EPA notified the Chalmette refinery of its intent to bring an enforcement action on two findings from the audit. In a letter received in June 2017 the EPA stated that there are “no violations or areas of concern” at the Chalmette refinery “for which EPA intends to take enforcement action” relative to the 2014 inspection.

On December 23, 2016, the Delaware City refinery received a Notice of Violation (“NOV”) from DNREC concerning a potential violation of the DNREC order authorizing the shipment of crude oil by barge from the refinery. The NOV alleges that DCR made shipments to locations other than the Paulsboro refinery in violation of the order and requests certain additional information. On February 7, 2017, DCR responded to the NOV. On March 10, 2017, DNREC issued a $150 fine in a Notice of Penalty Assessment and Secretary’s Order to the Delaware City refinery for violating the 2013 Secretary’s Order. DNREC’s investigation found that PBF Energy violated the Order throughout 2014, when it made 17 barge shipments of crude oil over 15 days to locations other than the Paulsboro refinery. DNREC determined that the Delaware City refinery had violated the order by failing to make timely and full disclosure to DNREC about the nature and extent of those shipments, and had misrepresented the number of shipments that went to other facilities. The penalty assessment and Secretary’s Order conclude that the 2013 Secretary’s Order was violated by the Delaware City refinery by shipping crude oil from the Delaware City terminal to three locations other than the Paulsboro refinery, on 15 days in 2014, making a total of 17 separate barge shipments containing approximately 35.7 million gallons of crude oil in total. On April 28, 2017, DCR appealed the Notice of Penalty Assessment and Secretary’s Order. To the extent that the penalty and Secretary’s Order are upheld, there will not be a material adverse effect on the Company’s financial position, results of operations or cash flows.

On December 28, 2016, DNREC issued a Coastal Zone Act permit (the “Ethanol permit”) to DCR allowing the utilization of existing tanks and existing marine loading equipment at their existing facilities to enable denatured ethanol to be loaded from storage tanks to marine vessels and shipped to offsite facilities. On January 13, 2017, the issuance of the Ethanol Permit was appealed by two environmental groups. On February 27, 2017, the Coastal Zone Industrial Board held a public hearing and dismissed the appeal, determining that the appellants did not have standing. The final opinion and order of the Board was issued March 16, 2017. The appellants filed an appeal of the Board’s decision with the Delaware Superior Court on March 30, 2017.

On February 3, 2011, EPA sent a request for information pursuant to Section 114 of the Clean Air Act to the Paulsboro refinery with respect to compliance with EPA standards governing flaring. The refinery and the EPA have reached agreement on settlement, which includes a civil penalty of $180. On July 13, 2017, the U.S. Department of Justice filed with the Court the motion to enter the consent decree. The refinery is waiting for the Court to take action on the motion, at which point it will be officially lodged.

On February 14, 2017, the New Jersey Department of Environmental Protection (“NJDEP”) submitted a proposed Administrative Consent Order (“ACO”) which covers air emission violations from 2013 through 2016, and work practice standards that were not subject to an affirmative defense at the Paulsboro refinery. In settlement of the violations, the NJDEP has proposed that the Paulsboro refinery pay a civil administrative penalty of $313, which includes $153 for a supplemental environmental project. This offer was accepted. The supplemental environmental project has already been completed, and the remaining $160 was paid to NJDEP in June 2017.

In connection with the acquisition of the Torrance refinery and related logistics assets, the Company assumed certain pre-existing environmental liabilities totaling $139,827 as of June 30, 2017 ($142,456 as of December 31, 2016), related to certain environmental remediation obligations to address existing soil and groundwater contamination and monitoring and other clean-up activities, which reflects the current estimated cost of the remediation obligations. The current portion of the environmental liability is recorded in Accrued expenses and

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PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

the non-current portion is recorded in Other long-term liabilities. In addition, in connection with the acquisition of the Torrance refinery and related logistics assets, the Company purchased a ten year, $100,000 environmental insurance policy to insure against unknown environmental liabilities. Furthermore, in connection with the acquisition, the Company assumed responsibility for certain specified environmental matters that occurred prior to the Company’s ownership of the refinery. Specifically, the Company assumed responsibility for specified NOVs issued by the Southern California Air Quality Management District (“SCAQMD”) in various years before the Company’s ownership.

Additionally, subsequent to the acquisition, the Company received further NOVs from the SCAQMD as well as from the City of Torrance and the City of Torrance Fire Department related to alleged operational violations, emission discharges and/or flaring incidents at the refinery. With the exception of one NOV for which a proposed settlement is less than $100, no settlement or penalty demands have been received to date with respect to the other NOVs. As the ultimate outcomes are uncertain, the Company cannot currently estimate the final amount or timing of their resolution. It is reasonably possible that SCAQMD and/or the City of Torrance will assess penalties in these matters but any such amount is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

The Company’s operations and many of the products it manufactures are subject to certain specific requirements of the Clean Air Act (the “CAA”) and related state and local regulations. The CAA contains provisions that require capital expenditures for the installation of certain air pollution control devices at the Company’s refineries. Subsequent rule making authorized by the CAA or similar laws or new agency interpretations of existing rules, may necessitate additional expenditures in future years.

In 2010, New York State adopted a Low-Sulfur Heating Oil mandate that, beginning July 1, 2012, requires all heating oil sold in New York State to contain no more than 15 parts per million (“PPM”) sulfur. Since July 1, 2012, other states in the Northeast market began requiring heating oil sold in their state to contain no more than 15 PPM sulfur. Currently, all of the Northeastern states and Washington DC have adopted sulfur controls on heating oil. Most of the Northeastern states will now require heating oil with 15 PPM or less sulfur by July 1, 2018 (except for Pennsylvania and Maryland - where less than 500 ppm sulfur is required). All of the heating oil the Company currently produces meets these specifications. The mandate and other requirements do not currently have a material impact on the Company’s financial position, results of operations or cash flows.

The EPA issued the final Tier 3 Gasoline standards on March 3, 2014 under the CAA. This final rule establishes more stringent vehicle emission standards and further reduces the sulfur content of gasoline starting in January 2017.  The new standard is set at 10 PPM sulfur in gasoline on an annual average basis starting January 1, 2017, with a credit trading program to provide compliance flexibility. The EPA responded to industry comments on the proposed rule and maintained the per gallon sulfur cap on gasoline at the existing 80 PPM cap. The refineries are complying with these new requirements as planned, either directly or using flexibility provided by sulfur credits generated or purchased in advance as an economic optimization. The standards set by the new rule are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

The EPA published the final 2014-2016 standards under the Renewable Fuels Standard (“RFS”) late in 2015 and issued final 2017 RFS standards in November 2016. In July 2017, the EPA issued proposed 2018 RFS standards that, while the Company is still reviewing, appear to slightly reduce renewable volume standards from final 2017 levels. It is not clear that renewable fuel producers will be able to produce the volumes of these fuels required for blending in accordance with the 2017 standards. The final 2017 cellulosic standard is at approximately 135% of the 2016 standard. It is likely that cellulosic RIN production will be lower than needed forcing obligated parties, such as the Company, to purchase cellulosic “waiver credits” to comply in 2017 (the waiver credit option by regulation is only available for the cellulosic standard). The advanced and total RIN requirements were raised (by 7% and 3%, respectively) above the original proposed level in May 2016. Production of advanced RINs has been below what is needed for compliance in 2016. Obligated parties, such as the Company, will likely be relying on the nesting feature of the biodiesel RIN to comply with the advanced standard in 2017. While the Company believes that total RIN production will be adequate for 2016 needs, the new 2017 standard will put obligated parties up

24

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

against the E10 blendwall leaving little flexibility. Compliance in 2017 will likely rely on obligated parties drawing down the supply of excess RINs collectively known as the “RIN bank” and could tighten the RIN market potentially raising RIN prices further. The Company is supporting a proposal to change the point of obligation under the RFS program to the “blender” of renewable fuels, of which the new presidential administration may be supportive. Depending on how the new administration addresses this proposal and any future changes to the RFS 2 program, there could be a material impact on the Company’s cost of compliance with RFS 2.

In addition, on December 1, 2015 the EPA finalized revisions to an existing air regulation concerning Maximum Achievable Control Technologies (“MACT”) for Petroleum Refineries. The regulation requires additional continuous monitoring systems for eligible process safety valves relieving to atmosphere, minimum flare gas heat (Btu) content, and delayed coke drum vent controls to be installed by January 30, 2019. In addition, a program for ambient fence line monitoring for benzene will need to be implemented by January 30, 2018. The Company is currently evaluating the final standards to evaluate the impact of this regulation, and at this time does not anticipate it will have a material impact on the Company’s financial position, results of operations or cash flows.

The EPA published a Final Rule to the Clean Water Act (“CWA”) Section 316(b) in August 2014 regarding cooling water intake structures, which includes requirements for petroleum refineries. The purpose of this rule is to prevent fish from being trapped against cooling water intake screens (impingement) and to prevent fish from being drawn through cooling water systems (entrainment). Facilities will be required to implement Best Technology Available (“BTA”) as soon as possible, but state agencies have the discretion to establish implementation time lines. The Company continues to evaluate the impact of this regulation, and at this time does not anticipate it having a material impact on the Company’s financial position, results of operations or cash flows.

As a result of the Torrance Acquisition, the Company is subject to greenhouse gas emission control regulations in the state of California pursuant to Assembly Bill 32 (“AB32”). AB32 imposes a statewide cap on greenhouse gas emissions, including emissions from transportation fuels, with the aim of returning the state to 1990 emission levels by 2020. AB32 is implemented through two market mechanisms including the Low Carbon Fuel Standard (“LCFS”) and Cap and Trade, which was extended for an additional ten years to 2030 in July 2017. The Company is responsible for the AB32 obligations related to the Torrance refinery beginning on July 1, 2016 and must purchase emission credits to comply with these obligations. Additionally, in September 2016, the state of California enacted Senate Bill 32 (“SB32”) which further reduces greenhouse gas emissions targets to 40 percent below 1990 levels by 2030.

However, subsequent to the acquisition, the Company is recovering the majority of these costs from its customers, and as such does not expect this obligation to materially impact the Company’s financial position, results of operations, or cash flows. To the degree there are unfavorable changes to AB32 or SB32 regulations or the Company is unable to recover such compliance costs from customers, these regulations could have a material adverse effect on our financial position, results of operations and cash flows.

On February 15, 2017, the Company received another notification that EPA records indicated that PBF Holding used potentially invalid RINs that were in fact verified under the EPA’s RIN Quality Assurance Program (“QAP”) by an independent auditor as QAP A RINs. Under the regulations, use of potentially invalid QAP A RINs provided the user with an affirmative defense from civil penalties provided certain conditions are met. The Company has asserted the affirmative defense and if accepted by the EPA will not be required to replace these RINs and will not be subject to civil penalties under the program. It is reasonably possible that the EPA will not accept the Company’s defense and may assess penalties in these matters but any such amount is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

The Company is also currently subject to certain other existing environmental claims and proceedings. The Company believes that there is only a remote possibility that future costs related to any of these other known contingent liability exposures would have a material impact on its financial position, results of operations or cash flows.

25

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

PBF LLC Limited Liability Company Agreement

The holders of limited liability company interests in PBF LLC, including PBF Energy, generally have to include for purposes of calculating their U.S. federal, state and local income taxes their share of any taxable income of PBF LLC, regardless of whether such holders receive cash distributions from PBF LLC. PBF Energy ultimately may not receive cash distributions from PBF LLC equal to its share of such taxable income or even equal to the actual tax due with respect to that income. For example, PBF LLC is required to include in taxable income PBF LLC’s allocable share of PBFX’s taxable income and gains (such share to be determined pursuant to the partnership agreement of PBFX), regardless of the amount of cash distributions received by PBF LLC from PBFX, and such taxable income and gains will flow-through to PBF Energy to the extent of its allocable share of the taxable income of PBF LLC. As a result, at certain times, the amount of cash otherwise ultimately available to PBF Energy on account of its indirect interest in PBFX may not be sufficient for PBF Energy to pay the amount of taxes it will owe on account of its indirect interests in PBFX.

Taxable income of PBF LLC generally is allocated to the holders of PBF LLC units (including PBF Energy) pro-rata in accordance with their respective share of the net profits and net losses of PBF LLC. In general, PBF LLC is required to make periodic tax distributions to the members of PBF LLC, including PBF Energy, pro-rata in accordance with their respective percentage interests for such period (as determined under the amended and restated limited liability company agreement of PBF LLC), subject to available cash and applicable law and contractual restrictions (including pursuant to our debt instruments) and based on certain assumptions. Generally, these tax distributions are required to be in an amount equal to our estimate of the taxable income of PBF LLC for the year multiplied by an assumed tax rate equal to the highest effective marginal combined U.S. federal, state and local income tax rate prescribed for an individual or corporate resident in New York, New York (taking into account the nondeductibility of certain expenses). If, with respect to any given calendar year, the aggregate periodic tax distributions were less than the actual taxable income of PBF LLC multiplied by the assumed tax rate, PBF LLC is required to make a “true up” tax distribution, no later than March 15 of the following year, equal to such difference, subject to the available cash and borrowings of PBF LLC. PBF LLC generally obtains funding to pay its tax distributions by causing PBF Holding to distribute cash to PBF LLC and from distributions it receives from PBFX.

Tax Receivable Agreement

PBF Energy (the Company’s indirect parent) entered into a tax receivable agreement with the PBF LLC Series A and PBF LLC Series B Unit holders (the “Tax Receivable Agreement”) that provides for the payment by PBF Energy to such persons of an amount equal to 85% of the amount of the benefits, if any, that PBF Energy is deemed to realize as a result of (i) increases in tax basis, as described below, and (ii) certain other tax benefits related to entering into the Tax Receivable Agreement, including tax benefits attributable to payments under the Tax Receivable Agreement. For purposes of the Tax Receivable Agreement, the benefits deemed realized by PBF Energy will be computed by comparing the actual income tax liability of PBF Energy (calculated with certain assumptions) to the amount of such taxes that PBF Energy would have been required to pay had there been no increase to the tax basis of the assets of PBF LLC as a result of purchases or exchanges of PBF LLC Series A Units for shares of PBF Energy’s Class A common stock and had PBF Energy not entered into the Tax Receivable Agreement. The term of the Tax Receivable Agreement will continue until all such tax benefits have been utilized or expired unless: (i) PBF Energy exercises its right to terminate the Tax Receivable Agreement, (ii) PBF Energy breaches any of its material obligations under the Tax Receivable Agreement or (iii) certain changes of control occur, in which case all obligations under the Tax Receivable Agreement will generally be accelerated and due as calculated under certain assumptions.

The payment obligations under the Tax Receivable Agreement are obligations of PBF Energy and not of PBF LLC or the Company. In general, PBF Energy expects to obtain funding for these annual payments from PBF LLC, primarily through tax distributions, which PBF LLC makes on a pro-rata basis to its owners. Such owners include PBF Energy, which holds a 96.6% interest in PBF LLC as of June 30, 2017 (96.5% as of December 31, 2016).

26

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

10. EMPLOYEE BENEFIT PLANS

The components of net periodic benefit cost related to the Company’s defined benefit plans consisted of the following:

	Three Months Ended   June 30,						Six Months Ended   June 30,
Pension Benefits	2017			2016			2017			2016
Components of net periodic benefit cost:
Service cost	$	10,144		$	7,339		$	20,287		$	14,679
Interest cost	1,084			775			2,168			1,551
Expected return on plan assets	(1,442		)	(1,107		)	(2,884		)	(2,213		)
Amortization of prior service cost	13			13			26			26
Amortization of actuarial loss (gain)	113			194			226			388
Net periodic benefit cost	$	9,912		$	7,214		$	19,823		$	14,431

	Three Months Ended   June 30,				Six Months Ended   June 30,
Post-Retirement Medical Plan	2017		2016		2017		2016
Components of net periodic benefit cost:
Service cost	$	316	$	219	$	632	$	439
Interest cost	172		133		344		267
Amortization of prior service cost	161		109		322		218
Amortization of actuarial loss (gain)	—		—		—		—
Net periodic benefit cost	$	649	$	461	$	1,298	$	924

11. FAIR VALUE MEASUREMENTS

The tables below present information about the Company’s financial assets and liabilities measured and recorded at fair value on a recurring basis and indicate the fair value hierarchy of the inputs utilized to determine the fair values as of June 30, 2017 and December 31, 2016.

We have elected to offset the fair value amounts recognized for multiple derivative contracts executed with the same counterparty; however, fair value amounts by hierarchy level are presented on a gross basis in the tables below. We have posted cash margin with various counterparties to support hedging and trading activities. The cash margin posted is required by counterparties as collateral deposits and cannot be offset against the fair value of open contracts except in the event of default. We have no derivative contracts that are subject to master netting arrangements that are reflected gross on the balance sheet.

27

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

	As of June 30, 2017
	Fair Value Hierarchy						Total Gross Fair Value		Effect of Counter-party Netting		Net Carrying Value on Balance Sheet
	Level 1		Level 2		Level 3
Assets:
Money market funds	$	14,284	$	—	$	—	$	14,284	N/A		$	14,284
Commodity contracts	32,291		1,041		—		33,332		(14,002	)	19,330
Derivatives included with inventory intermediation agreement obligations	—		9,165		—		9,165		—		9,165
Liabilities:
Commodity contracts	9,720		4,282		—		14,002		(14,002	)	—
Catalyst lease obligations	—		47,454		—		47,454		—		47,454

	As of December 31, 2016
	Fair Value Hierarchy						Total Gross Fair Value		Effect of Counter-party Netting		Net Carrying Value on Balance Sheet
	Level 1		Level 2		Level 3
Assets:
Money market funds	$	342,837	$	—	$	—	$	342,837	N/A		$	342,837
Commodity contracts	948		35		—		983		(983	)	—
Derivatives included with inventory intermediation agreement obligations	—		6,058		—		6,058		—		6,058
Liabilities:
Commodity contracts	859		3,548		84		4,491		(983	)	3,508
Catalyst lease obligations	—		45,969		—		45,969		—		45,969

The valuation methods used to measure financial instruments at fair value are as follows:

• Money market funds categorized in Level 1 of the fair value hierarchy are measured at fair value based on quoted market prices and included within Cash and cash equivalents.

• The commodity contracts categorized in Level 1 of the fair value hierarchy are measured at fair value based on quoted prices in an active market. The commodity contracts categorized in Level 2 of the fair value hierarchy are measured at fair value using a market approach based upon future commodity prices for similar instruments quoted in active markets.

• The commodity contracts categorized in Level 3 of the fair value hierarchy consist of commodity price swap contracts that relate to forecasted purchases of crude oil for which quoted forward market prices are not readily available due to market illiquidity. The forward prices used to value these swaps were derived using broker quotes, prices from other third party sources and other available market based data.

• The derivatives included with inventory intermediation agreement obligations and the catalyst lease obligations are categorized in Level 2 of the fair value hierarchy and are measured at fair value using a market approach based upon commodity prices for similar instruments quoted in active markets.

Non-qualified pension plan assets are measured at fair value using a market approach based on published net asset values of mutual funds as a practical expedient. As of June 30, 2017 and December 31, 2016, $9,599 and $9,440, respectively, were included within Deferred charges and other assets, net for these non-qualified pension plan assets.

28

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

The table below summarizes the changes in fair value measurements of commodity contracts categorized in Level 3 of the fair value hierarchy:

	Three Months Ended June 30,					Six Months Ended June 30,
	2017		2016			2017			2016
Balance at beginning of period	$	—	$	1,915		$	(84	)	$	3,543
Purchases	—		—			—			—
Settlements	—		(746		)	45			(1,003		)
Unrealized gain (loss) included in earnings	—		(676		)	39			(2,047		)
Transfers into Level 3	—		—			—			—
Transfers out of Level 3	—		—			—			—
Balance at end of period	$	—	$	493		$	—		$	493

There were no transfers between levels during the three and six months ended June 30, 2017 or 2016.

Fair value of debt

The table below summarizes the fair value and carrying value of debt as of June 30, 2017 and December 31, 2016.

	June 30, 2017				December 31, 2016
	Carrying value		Fair  value		Carrying  value		Fair value
Senior secured notes due 2020 (a)	$	—	$	—	$	670,867	$	696,098
Senior notes due 2023 (a) (d)	500,000		495,543		500,000		498,801
Senior notes due 2025 (a)	725,000		699,640		—		—
Revolving Loan (b)	350,000		350,000		350,000		350,000
PBF Rail Term Loan (b)	31,704		31,704		35,000		35,000
Catalyst leases (c)	47,454		47,454		45,969		45,969
	1,654,158		1,624,341		1,601,836		1,625,868
Less - Current maturities	—		—		—		—
Less - Unamortized deferred financing costs	27,415		n/a		25,277		n/a
Long-term debt	$	1,626,743	$	1,624,341	$	1,576,559	$	1,625,868

(a) The estimated fair value, categorized as a Level 2 measurement, was calculated based on the present value of future expected payments utilizing implied current market interest rates based on quoted prices of the senior secured notes and senior notes.

(b) The estimated fair value approximates carrying value, categorized as a Level 2 measurement, as these borrowings bear interest based upon short-term floating market interest rates.

(c) Catalyst leases are valued using a market approach based upon commodity prices for similar instruments quoted in active markets and are categorized as a Level 2 measurement. The Company has elected the fair value option for accounting for its catalyst lease repurchase obligations as the Company’s liability is directly impacted by the change in fair value of the underlying catalyst.

(d) As discussed in “Note 5 - Long-term Debt”, these notes became unsecured following the Collateral Fall-Away Event on May 30, 2017.

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PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

12. DERIVATIVES

The Company uses derivative instruments to mitigate certain exposures to commodity price risk. The Company entered into the A&R Intermediation Agreements that contain purchase obligations for certain volumes of intermediates and refined products. The purchase obligations related to intermediates and refined products under these agreements are derivative instruments that have been designated as fair value hedges in order to hedge the commodity price volatility of certain refinery inventory. The fair value of these purchase obligation derivatives is based on market prices of the underlying intermediates and refined products. The level of activity for these derivatives is based on the level of operating inventories.

As of June 30, 2017, there were 3,005,137 barrels of intermediates and refined products (2,942,348 barrels at December 31, 2016) outstanding under these derivative instruments designated as fair value hedges. These volumes represent the notional value of the contract.

The Company also enters into economic hedges primarily consisting of commodity derivative contracts that are not designated as hedges and are used to manage price volatility in certain crude oil and feedstock inventories as well as crude oil, feedstock, and refined product sales or purchases. The objective in entering into economic hedges is consistent with the objectives discussed above for fair value hedges. As of June 30, 2017, there were 10,566,000 barrels of crude oil and 8,732,000 barrels of refined products (5,950,000 and 2,831,000, respectively, as of December 31, 2016), outstanding under short and long term commodity derivative contracts not designated as hedges representing the notional value of the contracts.

The following tables provide information about the fair values of these derivative instruments as of June 30, 2017 and December 31, 2016 and the line items in the condensed consolidated balance sheet in which the fair values are reflected.

Description	Balance Sheet Location	Fair Value Asset/(Liability)
Derivatives designated as hedging instruments:
June 30, 2017:
Derivatives included with the inventory intermediation agreement obligations	Accrued expenses	$	9,165
December 31, 2016:
Derivatives included with the inventory intermediation agreement obligations	Accrued expenses	$	6,058
Derivatives not designated as hedging instruments:
June 30, 2017:
Commodity contracts	Accounts receivable	$	19,330
December 31, 2016:
Commodity contracts	Accrued expenses	$	3,508

30

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

The following table provides information about the gains or losses recognized in income on these derivative instruments and the line items in the condensed consolidated statement of operations in which such gains and losses are reflected.

Description	Location of Gain or (Loss) Recognized in  Income on Derivatives	Gain or (Loss) Recognized in Income on Derivatives
Derivatives designated as hedging instruments:
For the three months ended June 30, 2017:
Derivatives included with the inventory intermediation agreement obligations	Cost of products and other	$	(20,017	)
For the three months ended June 30, 2016:
Derivatives included with the inventory intermediation agreement obligations	Cost of products and other	$	8,973
For the six months ended June 30, 2017:
Derivatives included with the inventory intermediation agreement obligations	Cost of products and other	$	3,107
For the six months ended June 30, 2016:
Derivatives included with the inventory intermediation agreement obligations	Cost of products and other	$	(26,172	)
Derivatives not designated as hedging instruments:
For the three months ended June 30, 2017:
Commodity contracts	Cost of products and other	$	14,293
For the three months ended June 30, 2016:
Commodity contracts	Cost of products and other	$	(19,134	)
For the six months ended June 30, 2017:
Commodity contracts	Cost of products and other	$	14,684
For the six months ended June 30, 2016:
Commodity contracts	Cost of products and other	$	(39,087	)
Hedged items designated in fair value hedges:
For the three months ended June 30, 2017:
Intermediate and refined product inventory	Cost of products and other	$	20,017
For the three months ended June 30, 2016:
Intermediate and refined product inventory	Cost of products and other	$	(8,973	)
For the six months ended June 30, 2017:
Intermediate and refined product inventory	Cost of products and other	$	(3,107	)
For the six months ended June 30, 2016:
Intermediate and refined product inventory	Cost of products and other	$	26,172

The Company had no ineffectiveness related to the Company’s fair value hedges for the three and six months ended June 30, 2017 or 2016.

31

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

13. SUBSEQUENT EVENTS

Dividend Declared

On August 3, 2017, PBF Energy, PBF Holding’s indirect parent, announced a dividend of $0.30 per share on its outstanding Class A common stock. The dividend is payable on August 31, 2017 to PBF Energy Class A common stockholders of record at the close of business on August 15, 2017. If necessary, PBF Holding will make a distribution of up to approximately $34,100 to PBF LLC, which in turn will make pro-rata distributions to its members, including PBF Energy. PBF Energy will then use this distribution to fund the dividend payments to the stockholders of PBF Energy.

32

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

14. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF HOLDING

PBF Services Company, Delaware City Refining Company LLC, PBF Power Marketing LLC, Paulsboro Refining Company LLC, Toledo Refining Company LLC, Chalmette Refining, L.L.C., PBF Energy Western Region LLC, Torrance Refining Company LLC, Torrance Logistics Company LLC and PBF Investments LLC are 100% owned subsidiaries of PBF Holding and serve as guarantors of the obligations under the senior notes. These guarantees are full and unconditional and joint and several. For purposes of the following footnote, PBF Holding is referred to as “Issuer”. The indentures dated November 24, 2015 and May 30, 2017, among PBF Holding, PBF Finance, the guarantors party thereto and Wilmington Trust, National Association, governs subsidiaries designated as “Guarantor Subsidiaries”. PBF Energy Limited, PBF Transportation Company LLC, PBF Rail Logistics Company LLC, MOEM Pipeline LLC, Collins Pipeline Company, T&M Terminal Company, TVP Holding Company LLC (“TVP Holding”), Torrance Basin Pipeline Company LLC and Torrance Pipeline Company LLC are consolidated subsidiaries of the Company that are not guarantors of the Senior Notes. Additionally, our 50% equity investment in Torrance Valley Pipeline Company, held by TVP Holding is included in our Non-Guarantor financial position and results of operations and cash flows as TVP Holding is not a guarantor of the Senior Notes.

The Senior Notes were co-issued by PBF Finance. For purposes of the following footnote, PBF Finance is referred to as “Co-Issuer.” The Co-Issuer has no independent assets or operations.

The following supplemental combining and condensed consolidating financial information reflects the Issuer’s separate accounts, the combined accounts of the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries, the combining and consolidating adjustments and eliminations and the Issuer’s consolidated accounts for the dates and periods indicated. For purposes of the following combining and consolidating information, the Issuer’s investment in its subsidiaries and the Guarantor subsidiaries’ investments in their subsidiaries are accounted for under the equity method of accounting.

33

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

14. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF HOLDING

CONDENSED CONSOLIDATING BALANCE SHEET

(UNAUDITED)

	June 30, 2017
	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Combining and Consolidating Adjustments			Total
ASSETS
Current assets:
Cash and cash equivalents	$	78,302		$	5,961		$	29,756		$	—		$	114,019
Accounts receivable	577,813			4,498			27,449			—			609,760
Accounts receivable - affiliate	1,461			24,428			600			—			26,489
Affiliate notes receivable	—			11,600			—			—			11,600
Inventories	1,654,143			—			221,021			—			1,875,164
Prepaid expense and other current assets	30,759			27,443			168			—			58,370
Due from related parties	26,546,381			22,526,098			5,683,279			(54,755,758		)	—
Total current assets	28,888,859			22,600,028			5,962,273			(54,755,758		)	2,695,402
Property, plant and equipment, net	25,896			2,527,179			239,954			—			2,793,029
Investment in subsidiaries	7,524			431,662			—			(439,186		)	—
Investment in equity method investee	—			—			174,047			—			174,047
Deferred charges and other assets, net	30,571			780,710			—			—			811,281
Total assets	$	28,952,850		$	26,339,579		$	6,376,274		$	(55,194,944	)	$	6,473,759
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	240,234		$	185,231		$	12,175		$	—		$	437,640
Accounts payable - affiliate	31,347			159			(97		)	—			31,409
Accrued expenses	1,316,523			141,382			136,395			—			1,594,300
Deferred revenue	4,899			20			13			—			4,932
Due to related parties	23,277,244			25,761,022			5,717,492			(54,755,758		)	—
Total current liabilities	24,870,247			26,087,814			5,865,978			(54,755,758		)	2,068,281
Long-term debt	1,548,024			47,406			31,313			—			1,626,743
Deferred tax liabilities	—			—			50,822			—			50,822
Other long-term liabilities	29,772			189,189			4,145			—			223,106
Total liabilities	26,448,043			26,324,409			5,952,258			(54,755,758		)	3,968,952
Commitments and contingencies
Equity:
Member’s equity	2,349,357			1,720,206			362,598			(2,082,804		)	2,349,357
Retained earnings / (accumulated deficit)	167,868			(1,709,693		)	61,418			1,648,275			167,868
Accumulated other comprehensive (loss) income	(25,311		)	(8,236		)	—			8,236			(25,311		)
Total PBF Holding Company LLC equity	2,491,914			2,277			424,016			(426,293		)	2,491,914
Noncontrolling interest	12,893			12,893			—			(12,893		)	12,893
Total equity	2,504,807			15,170			424,016			(439,186		)	2,504,807
Total liabilities and equity	$	28,952,850		$	26,339,579		$	6,376,274		$	(55,194,944	)	$	6,473,759

34

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

14. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF HOLDING

CONDENSED CONSOLIDATING BALANCE SHEET

(UNAUDITED)

	December 31, 2016
	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Combining and Consolidating Adjustments			Total
ASSETS
Current assets:
Cash and cash equivalents	$	530,085		$	56,717		$	41,366	$	(1,463	)	$	626,705
Accounts receivable	599,147			7,999			8,735		—			615,881
Accounts receivable - affiliate	2,432			4,504			695		—			7,631
Inventories	1,680,058			—			183,502		—			1,863,560
Prepaid expense and other current assets	27,443			12,933			160		—			40,536
Due from related parties	24,141,120			21,883,569			4,692,799		(50,717,488		)	—
Total current assets	26,980,285			21,965,722			4,927,257		(50,718,951		)	3,154,313
Property, plant and equipment, net	33,772			2,452,877			242,050		—			2,728,699
Investment in subsidiaries	705,034			440,377			—		(1,145,411		)	—
Investment in equity method investee	—			—			179,882		—			179,882
Deferred charges and other assets, net	12,317			491,673			13		—			504,003
Total assets	$	27,731,408		$	25,350,649		$	5,349,202	$	(51,864,362	)	$	6,566,897
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	360,260		$	157,277		$	14,291	$	(1,463	)	$	530,365
Accounts payable - affiliate	37,077			786			—		—			37,863
Accrued expenses	1,094,581			201,935			166,213		—			1,462,729
Deferred revenue	10,901			1,438			1		—			12,340
Due to related parties	22,027,065			24,031,520			4,658,903		(50,717,488		)	—
Total current liabilities	23,529,884			24,392,956			4,839,408		(50,718,951		)	2,043,297
Long-term debt	1,496,085			45,908			34,566		—			1,576,559
Affiliate notes payable	86,298			—			—		—			86,298
Deferred tax liabilities	—			—			45,699		—			45,699
Other long-term liabilities	30,208			192,204			3,699		—			226,111
Total liabilities	25,142,475			24,631,068			4,923,372		(50,718,951		)	3,977,964
Commitments and contingencies
Equity:
Member’s equity	2,155,863			1,714,997			374,067		(2,089,064		)	2,155,863
Retained earnings / (accumulated deficit)	446,519			(999,693		)	51,763		947,930			446,519
Accumulated other comprehensive (loss) income	(25,962		)	(8,236		)	—		8,236			(25,962		)
Total PBF Holding Company LLC equity	2,576,420			707,068			425,830		(1,132,898		)	2,576,420
Noncontrolling interest	12,513			12,513			—		(12,513		)	12,513
Total equity	2,588,933			719,581			425,830		(1,145,411		)	2,588,933
Total liabilities and equity	$	27,731,408		$	25,350,649		$	5,349,202	$	(51,864,362	)	$	6,566,897

35

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

14. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF HOLDING

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

	Three Months Ended June 30, 2017
	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Combining and Consolidating Adjustments			Total
Revenues	$	4,928,464		$	134,566		$	512,262		$	(562,041	)	$	5,013,251
Cost and expenses:
Cost of products and other	4,703,574			32,288			489,012			(562,041		)	4,662,833
Operating expenses (excluding depreciation)	(326		)	389,889			9,007			—			398,570
General and administrative expenses	28,843			6,286			(209		)	—			34,920
Equity (income) loss in investee	—			—			(3,820		)	—			(3,820		)
Loss on sale of assets	—			29			—			—			29
Depreciation and amortization expense	6,019			55,077			1,897			—			62,993
	4,738,110			483,569			495,887			(562,041		)	5,155,525
Income (loss) from operations	190,354			(349,003		)	16,375			—			(142,274		)
Other income (expenses):
Equity in earnings (loss) of subsidiaries	(338,171		)	1,442			—			336,729			—
Change in fair value of catalyst leases	—			1,104			—			—			1,104
Debt extinguishment costs	(25,451		)	—			—			—			(25,451		)
Interest expense, net	(32,108		)	(480		)	(269		)	—			(32,857		)
Income (loss) before income taxes	(205,376		)	(346,937		)	16,106			336,729			(199,478		)
Income tax expense	—			—			5,898			—			5,898
Net income (loss)	(205,376		)	(346,937		)	10,208			336,729			(205,376		)
Less: net income attributable to noncontrolling interests	267			267			—			(267		)	267
Net income (loss) attributable to PBF Holding Company LLC	$	(205,643	)	$	(347,204	)	$	10,208		$	336,996		$	(205,643	)
Comprehensive income (loss) attributable to PBF Holding Company LLC	$	(205,313	)	$	(347,204	)	$	10,208		$	336,996		$	(205,313	)

36

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

14. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF HOLDING

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

	Three Months Ended June 30, 2016
	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Combining and Consolidating Adjustments			Total
Revenues	$	3,834,460		$	95,163		$	339,721		$	(413,571	)	$	3,855,773
Cost and expenses:
Cost of products and other	3,300,539			39,483			358,297			(413,571		)	3,284,748
Operating expenses (excluding depreciation)	(28		)	268,608			2,959			—			271,539
General and administrative expenses	28,609			9,209			273			—			38,091
Loss on sale of assets	—			24			3,198			—			3,222
Depreciation and amortization expense	1,379			45,780			1,760			—			48,919
	3,330,499			363,104			366,487			(413,571		)	3,646,519
Income (loss) from operations	503,961			(267,941		)	(26,766		)	—			209,254
Other income (expenses):
Equity in earnings (loss) of subsidiaries	(292,212		)	—			—			292,212			—
Change in fair value of catalyst leases	—			(1,748		)	—			—			(1,748		)
Interest expense, net	(30,245		)	(484		)	(550		)	—			(31,279		)
Income (loss) before income taxes	181,504			(270,173		)	(27,316		)	292,212			176,227
Income tax benefit	—			—			(5,277		)	—			(5,277		)
Net income (loss)	181,504			(270,173		)	(22,039		)	292,212			181,504
Less: net income attributable to noncontrolling interests	90			90			—			(90		)	90
Net income (loss) attributable to PBF Holding Company LLC	$	181,414		$	(270,263	)	$	(22,039	)	$	292,302		$	181,414
Comprehensive income (loss) attributable to PBF Holding Company LLC	$	181,829		$	(270,263	)	$	(22,039	)	$	292,302		$	181,829

37

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

14. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF HOLDING

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

	Six Months Ended June 30, 2017
	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Combining and Consolidating Adjustments			Total
Revenues	$	9,654,243		$	760,335		$	1,042,167		$	(1,693,296	)	$	9,763,449
Cost and expenses:
Cost of products and other	9,064,194			530,062			1,013,627			(1,693,296		)	8,914,587
Operating expenses (excluding depreciation)	(331		)	819,419			16,335			—			835,423
General and administrative expenses	62,538			13,451			(590		)	—			75,399
Equity (income) loss in investee	—			—			(7,419		)	—			(7,419		)
Loss on sale of assets	—			912			—			—			912
Depreciation and amortization expense	7,781			107,124			3,778			—			118,683
	9,134,182			1,470,968			1,025,731			(1,693,296		)	9,937,585
Income (loss) from operations	520,061			(710,633		)	16,436			—			(174,136		)
Other income (expenses):
Equity in earnings (loss) of subsidiaries	(703,300		)	3,335			—			699,965			—
Change in fair value of catalyst leases	—			(1,484		)	—			—			(1,484		)
Debt extinguishment costs	(25,451		)	—			—			—			(25,451		)
Interest expense, net	(62,226		)	(838		)	(449		)	—			(63,513		)
Income (loss) before income taxes	(270,916		)	(709,620		)	15,987			699,965			(264,584		)
Income tax expense	—			—			6,332			—			6,332
Net income (loss)	(270,916		)	(709,620		)	9,655			699,965			(270,916		)
Less: net income attributable to noncontrolling interests	380			380			—			(380		)	380
Net income (loss) attributable to PBF Holding Company LLC	$	(271,296	)	$	(710,000	)	$	9,655		$	700,345		$	(271,296	)
Comprehensive income (loss) attributable to PBF Holding Company LLC	$	(270,645	)	$	(710,000	)	$	9,655		$	700,345		$	(270,645	)

38

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

14. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF HOLDING

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

	Six Months Ended June 30, 2016
	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Combining and Consolidating Adjustments			Total
Revenues	$	6,630,376		$	144,782		$	660,441		$	(779,641	)	$	6,655,958
Cost and expenses:
Cost of products and other	5,739,927			103,453			666,992			(779,641		)	5,730,731
Operating expenses (excluding depreciation)	(400		)	562,642			5,936			—			568,178
General and administrative expenses	57,306			16,060			(2,006		)	—			71,360
Loss on sale of assets	—			24			3,198			—			3,222
Depreciation and amortization expense	3,076			96,522			3,614			—			103,212
	5,799,909			778,701			677,734			(779,641		)	6,476,703
Income (loss) from operations	830,467			(633,919		)	(17,293		)	—			179,255
Other income (expenses):
Equity in earnings (loss) of subsidiaries	(684,805		)	—			—			684,805			—
Change in fair value of catalyst leases	—			(4,633		)	—			—			(4,633		)
Interest expense, net	(62,586		)	(842		)	(1,122		)	—			(64,550		)
Income (loss) before income taxes	83,076			(639,394		)	(18,415		)	684,805			110,072
Income tax expense	—			—			26,996			—			26,996
Net income (loss)	83,076			(639,394		)	(45,411		)	684,805			83,076
Less: net income attributable to noncontrolling interests	393			393			—			(393		)	393
Net income (loss) attributable to PBF Holding Company LLC	$	82,683		$	(639,787	)	$	(45,411	)	$	685,198		$	82,683
Comprehensive income (loss) attributable to PBF Holding Company LLC	$	83,720		$	(639,787	)	$	(45,411	)	$	685,198		$	83,720

39

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

14. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF HOLDING

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOW

(UNAUDITED)

	Six Months Ended June 30, 2017
	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Combining and Consolidating Adjustments			Total
Cash flows from operating activities:
Net income (loss)	$	(270,916	)	$	(709,620	)	$	9,655		$	699,965		$	(270,916	)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operations:
Depreciation and amortization	11,596			107,430			3,823			—			122,849
Stock-based compensation	—			10,134			—			—			10,134
Change in fair value of catalyst leases	—			1,484			—			—			1,484
Deferred income taxes	—			—			5,123			—			5,123
Non-cash lower of cost or market inventory adjustment	167,134			—			—			—			167,134
Non-cash change in inventory repurchase obligations	(3,107		)	—			—			—			(3,107		)
Debt extinguishment costs	25,451			—			—			—			25,451
Pension and other post-retirement benefit costs	3,304			17,817			—			—			21,121
(Income) from equity method investee	—			—			(7,419		)	—			(7,419		)
Distributions from equity method investee	—			—			12,254			—			12,254
Loss on sale of assets	—			912			—			—			912
Equity in earnings (loss) of subsidiaries	703,300			(3,335		)	—			(699,965		)	—
Changes in operating assets and liabilities:
Accounts receivable	21,334			3,501			(18,714		)	—			6,121
Due to/from affiliates	(1,111,279		)	1,029,667			68,107			—			(13,505		)
Inventories	(141,219		)	—			(37,519		)	—			(178,738		)
Prepaid expense and other current assets	(3,314		)	(14,716		)	(8		)	—			(18,038		)
Accounts payable	(120,026		)	(24,140		)	(2,116		)	1,463			(144,819		)
Accrued expenses	178,794			(42,903		)	(29,818		)	—			106,073
Deferred revenue	(6,002		)	(1,418		)	12			—			(7,408		)
Other assets and liabilities	(15,218		)	(13,881		)	(11,426		)	—			(40,525		)
Net cash (used in) provided by operations	(560,168		)	360,932			(8,046		)	1,463			(205,819		)
Cash flows from investing activities:
Expenditures for property, plant and equipment	(287		)	(179,019		)	(269		)	—			(179,575		)
Expenditures for deferred turnaround costs	—			(214,375		)	—			—			(214,375		)
Expenditures for other assets	—			(23,747		)	—			—			(23,747		)
Net cash used in investing activities	(287		)	(417,141		)	(269		)	—			(417,697		)
Cash flows from financing activities:
Contributions from PBF LLC	97,000			—			—			—			97,000
Distribution to members	(5,252		)	—			—			—			(5,252		)
Proceeds from 2025 7.25% Senior Notes	725,000			—			—			—			725,000
Cash paid to extinguish 2020 8.25% Senior Secured Notes	(690,209		)	—			—			—			(690,209		)
Repayments of PBF Rail Term Loan	—			—			(3,295		)	—			(3,295		)
Proceeds from revolver borrowings	290,000			—			—			—			290,000
Repayments of revolver borrowings	(290,000		)	—			—			—			(290,000		)
Due to/from affiliates	(5,453		)	5,453			—			—			—
Deferred financing costs and other	(12,414		)	—			—			—			(12,414		)
Net cash provided by (used in) financing activities	108,672			5,453			(3,295		)	—			110,830
Net (decrease) increase in cash and cash equivalents	(451,783		)	(50,756		)	(11,610		)	1,463			(512,686		)
Cash and cash equivalents, beginning of period	530,085			56,717			41,366			(1,463		)	626,705
Cash and cash equivalents, end of period	$	78,302		$	5,961		$	29,756		$	—		$	114,019

40

PBF HOLDING COMPANY LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, IN THOUSANDS, EXCEPT UNIT, BARREL AND PER BARREL DATA)

14. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF PBF HOLDING

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOW

(UNAUDITED)

	Six Months Ended June 30, 2016
	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Combining and Consolidating Adjustments			Total
Cash flows from operating activities:
Net income (loss)	$	83,076		$	(639,394	)	$	(45,411	)	$	684,805		$	83,076
Adjustments to reconcile net income (loss) to net cash (used in) provided by operations:
Depreciation and amortization	7,405			96,645			3,895			—			107,945
Stock-based compensation	—			9,999			—			—			9,999
Change in fair value of catalyst leases	—			4,633			—			—			4,633
Deferred income taxes	—			—			27,060			—			27,060
Non-cash lower of cost or market inventory adjustment	(200,063		)	(16,780		)	—			—			(216,843		)
Non-cash change in inventory repurchase obligations	—			26,172			—			—			26,172
Pension and other post-retirement benefit costs	3,464			11,891			—			—			15,355
Loss on sale of assets	—			24			3,198			—			3,222
Equity in earnings of subsidiaries	684,805			—			—			(684,805		)	—
Changes in operating assets and liabilities:
Accounts receivable	(190,245		)	6,084			(6,484		)	—			(190,645		)
Due to/from affiliates	(838,988		)	798,315			38,216			—			(2,457		)
Inventories	91,094			(11,455		)	2,940			—			82,579
Prepaid expense and other current assets	(4,255		)	(12,365		)	198			—			(16,422		)
Accounts payable	80,299			(24,617		)	1,030			1,930			58,642
Accrued expenses	175,598			(2,269		)	(9,082		)	—			164,247
Deferred revenue	3,767			—			—			—			3,767
Other assets and liabilities	(10,304		)	(3,305		)	1,087			—			(12,522		)
Net cash (used in) provided by operations	(114,347		)	243,578			16,647			1,930			147,808
Cash flows from investing activities:
Expenditures for property, plant and equipment	(11,765		)	(98,259		)	(11		)	—			(110,035		)
Expenditures for deferred turnaround costs	—			(106,649		)	—			—			(106,649		)
Expenditures for other assets	—			(21,325		)	—			—			(21,325		)
Investment in subsidiaries	12,800			—			—			(12,800		)	—
Chalmette Acquisition working capital settlement	—			(2,659		)	—			—			(2,659		)
Proceeds from sale of assets	—			—			6,860			—			6,860
Net cash provided by (used in) investing activities	1,035			(228,892		)	6,849			(12,800		)	(233,808		)
Cash flows from financing activities:
Distributions to Parent	—			—			(12,800		)	12,800			—
Distributions to members	(61,667		)	—			—			—			(61,667		)
Proceeds from affiliate notes payable	635			—			—			—			635
Repayment of affiliate notes payable	(517		)	—			—			—			(517		)
Repayment of Rail Facility revolver borrowings	—			—			(6,970		)	—			(6,970		)
Proceeds from revolver borrowings	550,000			—			—			—			550,000
Net cash provided by (used in) financing activities	488,451			—			(19,770		)	12,800			481,481
Net increase in cash and cash equivalents	375,139			14,686			3,726			1,930			395,481
Cash and cash equivalents, beginning of period	882,820			6,236			28,968			(3,275		)	914,749
Cash and cash equivalents, end of period	$	1,257,959		$	20,922		$	32,694		$	(1,345	)	$	1,310,230

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the audited financial statements of PBF Holding Company LLC included in the Annual Report on Form 10-K for the year ended December 31, 2016 and the unaudited financial statements and related notes included in this report. The following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expected performance. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors. We caution that assumptions, expectations, projections, intentions or beliefs about future events may, and often do, vary from actual results and the differences can be material. Please see “Cautionary Note Regarding Forward-Looking Statements.”

Unless the context indicates otherwise, the terms “we,” “us,” and “our” refer to PBF Holding and its consolidated subsidiaries.

Overview

We are one of the largest independent petroleum refiners and suppliers of unbranded transportation fuels, heating oil, petrochemical feedstocks, lubricants and other petroleum products in the United States. We sell our products throughout the Northeast, Midwest, Gulf Coast and West Coast of the United States, as well as in other regions of the United States and Canada, and are able to ship products to other international destinations. As of June 30, 2017, we own and operate five domestic oil refineries and related assets. As of June 30, 2017, our refineries have a combined processing capacity, known as throughput, of approximately 900,000 barrels per day (“bpd”), and a weighted-average Nelson Complexity Index of 12.2. The Company’s oil refineries are aggregated into one reportable segment.

Our five refineries are located in Delaware City, Delaware, Paulsboro, New Jersey, Toledo, Ohio, New Orleans, Louisiana and Torrance, California. Each of these refineries is briefly described in the table below:

Refinery	Region	Nelson Complexity	Throughput Capacity (in barrels per day)	PADD	Crude Processed (1)	Source (1)
Delaware City	East Coast	11.3	190,000	1	medium and heavy sour crude	water, rail
Paulsboro	East Coast	13.2	180,000	1	medium and heavy sour crude	water, rail
Toledo	Mid-Continent	9.2	170,000	2	light, sweet crude	pipeline, truck, rail
Chalmette	Gulf Coast	12.7	189,000	3	light and heavy crude	water, pipeline
Torrance	West Coast	14.9	155,000	5	heavy and medium crude	pipeline, water, truck

________

⁽¹⁾ Reflects the typical crude and feedstocks and related sources utilized under normal operating conditions and prevailing market environments.

We are a wholly-owned subsidiary of PBF LLC and an indirect subsidiary of PBF Energy. PBF Finance is a wholly-owned subsidiary of PBF Holding. We are the parent company for PBF LLC’s refinery operating subsidiaries.

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Factors Affecting Comparability Between Periods

Our results have been affected by the following events, the understanding of which will aid in assessing the comparability of our period to period financial performance and financial condition.

Senior Notes Offering

On May 30, 2017, we and PBF Finance issued $725.0 million in aggregate principal amount of 7.25% Senior Notes due 2025 (the “2025 Senior Notes”). We used the net proceeds to fund the cash tender offer (the “Tender Offer”) for any and all of our outstanding 8.25% senior secured notes due 2020 (the “2020 Senior Secured Notes”), to pay the related redemption price and accrued and unpaid interest for any 2020 Senior Secured Notes that remained outstanding after the completion of the Tender Offer, and for general corporate purposes. As described in “Note 5 - Long-term Debt”, upon the satisfaction and discharge of the 2020 Senior Secured Notes in connection with the closing of the Tender Offer and the redemption, the 2023 Senior Notes became unsecured and certain covenants were modified, as provided for in the indenture governing the 2023 Senior Notes and related documents.

Inventory Intermediation Agreements

On May 4, 2017, we and our subsidiaries, DCR and PRC, entered into amendments to the inventory intermediation agreements (as amended in the second quarter of 2017, the "A&R Intermediation Agreements") with J. Aron, pursuant to which certain terms of the existing inventory intermediation agreements were amended, including, among other things, pricing and an extension of the terms. The A&R Intermediation Agreement by and among J. Aron, us and PRC relating to the Paulsboro refinery extends the term to January 2, 2018, which term may be further extended by mutual consent of the parties to July 1, 2019. The A&R Intermediation Agreement by and among J. Aron, us and DCR relating to the Delaware City refinery extends the term to July 1, 2019, which term may be further extended by mutual consent of the parties to July 1, 2020.

Torrance Acquisition

On July 1, 2016, we acquired from ExxonMobil Oil Corporation (“ExxonMobil”) and its subsidiary, Mobil Pacific Pipeline Company (together, the “Torrance Sellers”), the Torrance refinery and related logistics assets (collectively, the “Torrance Acquisition”). The Torrance refinery is strategically positioned in Southern California with advantaged logistics connectivity that offers flexible raw material sourcing and product distribution opportunities primarily in the California, Las Vegas and Phoenix area markets.

In addition to refining assets, the Torrance Acquisition included a number of high-quality logistics assets consisting of a sophisticated network of crude and products pipelines, product distribution terminals and refinery crude and product storage facilities. The most significant of the logistics assets is a 189-mile crude gathering and transportation system which delivers San Joaquin Valley crude oil directly from the field to the refinery. Additionally, included in the transaction were several pipelines which provide access to sources of crude oil including the Ports of Long Beach and Los Angeles, as well as clean product outlets with a direct pipeline supplying jet fuel to the Los Angeles airport. The Torrance refinery also has crude and product storage facilities with approximately 8.6 million barrels of shell capacity.

The purchase price for the assets was approximately $521.4 million in cash after post-closing purchase price adjustments, plus final working capital of $450.6 million. The final purchase price and fair value allocation were completed as of June 30, 2017. During the measurement period, which ended in June 2017, adjustments were made to the Company’s preliminary fair value estimates related primarily to Property, plant and equipment and Other long-term liabilities reflecting the finalization of the Company’s assessment of the costs and duration of certain assumed pre-existing environmental obligations. The transaction was financed through a combination of cash on hand, including proceeds from certain PBF Energy equity offerings, and borrowings under our asset based revolving credit agreement (“Revolving Loan”).

PNGPC Contribution Agreement

On February 15, 2017, PBFX entered into a contribution agreement (the “PNGPC Contribution Agreement”) between PBFX and PBF LLC. Pursuant to the PNGPC Contribution Agreement, we contributed to PBF LLC, which, in turn, contributed to PBFX’s wholly owned subsidiary PBFX Operating Company LLC (“PBFX Op Co”) all of the issued and outstanding limited liability company interests of Paulsboro Natural Gas Pipeline Company LLC (“PNGPC”). PNGPC owns and operates an existing interstate natural gas pipeline that runs under the Delaware River and terminates at our Paulsboro refinery. PNGPC has Federal Energy Regulatory Commission (“FERC”)

43

approval for, and is in the process of constructing, a new 24” pipeline (the “New Pipeline”) to replace the existing pipeline, which was placed in service in August 2017. In consideration for the PNGPC limited liability company interests, PBFX delivered to PBF LLC (i) an $11.6 million intercompany promissory note in favor of Paulsboro Refining Company LLC, a wholly owned subsidiary of ours (the “Promissory Note”), (ii) an expansion rights and right of first refusal agreement in favor of PBF LLC with respect to the New Pipeline and (iii) an assignment and assumption agreement with respect to certain outstanding litigation involving PNGPC and the existing pipeline.

Chalmette Storage Tank Lease

On February 15, 2017, we entered into a ten-year storage services agreement (the “Chalmette Storage Agreement”) with PBFX Op Co under which PBFX Op Co will provide storage services to us upon the earlier of November 1, 2017 and the completion of construction of a new tank with a shell capacity of 625,000 barrels at our Chalmette refinery. PBFX Op Co and Chalmette Refining, L.L.C. (“Chalmette Refining”) have entered into a twenty-year lease for the premises upon which the tank will be located (the “Lease”) and a project management agreement pursuant to which Chalmette Refining will manage the construction of the tank. The Chalmette Storage Agreement can be extended by us for two additional five-year periods. Under the Chalmette Storage Agreement, PBFX will provide us with storage services in return for storage fees. The storage services require PBFX to accept, redeliver and store all products tendered by us in the tank and we will pay a monthly fee of $0.60 per barrel of shell capacity. The Lease can be extended by PBFX Op Co for two additional ten year periods.

TVPC Contribution Agreement

On August 31, 2016, PBFX entered into a contribution agreement (the “TVPC Contribution Agreement”) between PBFX and PBF LLC. Pursuant to the TVPC Contribution Agreement, PBF Holding distributed to PBF LLC, and PBFX acquired from PBF LLC, 50% of the issued and outstanding limited liability company interests of Torrance Valley Pipeline Company LLC (“TVPC”), whose assets consist of the 189-mile San Joaquin Valley Pipeline system, including the M55, M1 and M70 pipeline system, including 11 pipeline stations with storage capability and truck unloading capacity at two of the stations. Subsequent to the distribution of TVPC pursuant to the TVPC Contribution Agreement, PBF Holding deconsolidated TVPC and has recognized an equity investment in TVPC for its 50% noncontrolling interest.

Agreements with PBFX

PBFX is a fee-based, growth-oriented, publicly traded Delaware master limited partnership formed by our indirect parent company, PBF Energy, to own or lease, operate, develop and acquire crude oil, refined petroleum products and natural gas terminals, pipelines, storage facilities and similar logistics assets. PBFX engages in the receiving, handling, storage and transferring of crude oil, refined products, natural gas and intermediates from sources located throughout the United States and Canada for PBF Energy in support of certain of our refineries, as well as for third party customers.

On May 14, 2014, PBFX completed its initial public offering (the “PBFX Offering”). Beginning with the completion of the PBFX Offering, we have entered into a series of agreements with PBFX, including contribution, commercial and operational agreements. Each of these agreements and their impact to our operations is described in “Note 8 - Related Party Transactions” in our condensed consolidated financial statements.

A summary of revenue and expense transactions with PBFX is as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Revenues under affiliate agreements:
Services Agreement	$	1.7	$	1.1	$	3.3	$	2.2
Omnibus Agreement	1.6		1.4		3.3		2.3
Total expenses under affiliate agreements	58.4		38.0		114.6		74.5

Amended and Restated Asset Based Revolving Credit Facility

The Third Amended and Restated Revolving Loan is available to be used for working capital and other general corporate purposes. As noted in “Note 2 - Acquisitions”, we took down an advance under our Revolving Loan to partially fund the Torrance Acquisition in 2016. The outstanding balance under our Revolving Loan was

44

$350.0 million, $350.0 million and $550.0 million as of June 30, 2017, December 31, 2016 and June 30, 2016, respectively.

Rail Facility Revolving Credit Facility

Effective March 25, 2014, PBF Rail Logistics Company LLC (“PBF Rail”), an indirect wholly-owned subsidiary of ours, entered into a $250.0 million secured revolving credit agreement (the “Rail Facility”). The primary purpose of the Rail Facility was to fund the acquisition by PBF Rail of crude tank cars (the “Eligible Railcars”) before December 2015.

On December 22, 2016, the Rail Facility was terminated and replaced with the PBF Rail Term Loan (as described below).

PBF Rail Term Loan

On December 22, 2016, PBF Rail entered into a $35.0 million term loan (the “PBF Rail Term Loan”) with a bank previously party to the Rail Facility. The PBF Rail Term Loan amortizes monthly over its five year term and bears interest at the one month LIBOR plus the margin as defined in the credit agreement. As security for the PBF Rail Term Loan, PBF Rail pledged, among other things: (i) certain eligible crude tank cars; (ii) the debt service reserve account; and (iii) our member interest in PBF Rail. Additionally, the PBF Rail Term Loan contains customary terms, events of default and covenants for a transaction of this nature. PBF Rail may at any time repay the PBF Rail Term Loan without penalty in the event that railcars collateralizing the loan are sold, scrapped or otherwise removed from the collateral pool.

The outstanding balance of the PBF Rail Term Loan was $31.7 million and $35.0 million as of June 30, 2017 and December 31, 2016, respectively.

Affiliate notes payable with PBF LLC and PBF Energy

Our long-term debt obligations may include outstanding affiliate notes payable with PBF LLC and PBF Energy. The affiliate notes have an interest rate of 2.5% and a five year term but may be prepaid in whole or in part at any time, at the option of PBF Holding, without penalty or premium. Additional borrowings may be made by PBF Holding under such affiliate notes payable from time to time. In the fourth quarter of 2016, the affiliate notes were extended to 2021. Additionally, in the fourth quarter of 2016, PBF LLC converted outstanding affiliate notes payable from PBF Holding of $379.9 million to a capital contribution. In the first quarter of 2017, PBF LLC converted the full amount of outstanding affiliate notes payable from PBF Holding of $86.3 million to a capital contribution. As of June 30, 2017, PBF Holding had no outstanding affiliate notes payable with PBF Energy and PBF LLC ($86.3 million outstanding as of December 31, 2016).

45

Results of Operations

The following tables reflect our financial and operating highlights for the three and six months ended June 30, 2017 and 2016 (amounts in thousands).

	Three Months Ended   June 30,						Six Months Ended   June 30,
	2017			2016			2017			2016
Revenue	$	5,013,251		$	3,855,773		$	9,763,449		$	6,655,958
Cost and expenses:
Cost of products and other	4,662,833			3,284,748			8,914,587			5,730,731
Operating expenses (excluding depreciation of $56,973, $47,333, $110,790 and $99,722 for the periods presented, respectively)	398,570			271,539			835,423			568,178
General and administrative expenses	34,920			38,091			75,399			71,360
Equity (income) loss in investee	(3,820		)	—			(7,419		)	—
Loss on sale of assets	29			3,222			912			3,222
Depreciation and amortization expense	62,993			48,919			118,683			103,212
Income (loss) from operations:	(142,274		)	209,254			(174,136		)	179,255
Change in fair value of catalyst leases	1,104			(1,748		)	(1,484		)	(4,633		)
Debt extinguishment costs	(25,451		)	—			(25,451		)	—
Interest expense, net	(32,857		)	(31,279		)	(63,513		)	(64,550		)
Income (loss) before income taxes	(199,478		)	176,227			(264,584		)	110,072
Income tax expense (benefit)	5,898			(5,277		)	6,332			26,996
Net income (loss)	(205,376		)	181,504			(270,916		)	83,076
Less: net income attributable to noncontrolling interests	267			90			380			393
Net income (loss) attributable to PBF Holding Company LLC	$	(205,643	)	$	181,414		$	(271,296	)	$	82,683
Gross margin	$	(105,125	)	$	251,946		$	(97,461	)	$	256,913
Gross refining margin (1)	$	350,418		$	571,025		$	848,862		$	925,227

(1) See Non-GAAP Financial Measures below.

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Operating Highlights

	Three Months Ended   June 30,						Six Months Ended   June 30,
	2017			2016			2017			2016
Key Operating Information
Production (bpd in thousands)	764.2			702.7			748.8			678.0
Crude oil and feedstocks throughput (bpd in thousands)	769.2			698.1			753.7			674.0
Total crude oil and feedstocks throughput (millions of barrels)	70.0			63.5			136.4			122.7
Gross margin per barrel of throughput	$	(1.49	)	$	3.96		$	(0.71	)	$	2.09
Gross refining margin, excluding special items, per barrel of throughput (1)	$	7.17		$	6.50		$	7.45		$	5.77
Refinery operating expenses, excluding depreciation, per barrel of throughput	$	5.69		$	4.27		$	6.12		$	4.63
Crude and feedstocks (% of total throughput) (2)
Heavy crude	30		%	18		%	35		%	16		%
Medium crude	31		%	44		%	30		%	47		%
Light crude	23		%	27		%	20		%	25		%
Other feedstocks and blends	16		%	11		%	15		%	12		%
Total throughput	100		%	100		%	100		%	100		%
Yield (% of total throughput)
Gasoline and gasoline blendstocks	50		%	47		%	51		%	48		%
Distillates and distillate blendstocks	30		%	32		%	30		%	31		%
Lubes	1		%	1		%	1		%	1		%
Chemicals	2		%	4		%	2		%	4		%
Other	16		%	16		%	16		%	16		%
Total yield	99		%	100		%	100		%	100		%

(1) See Non-GAAP Financial Measures below.

(2) We define heavy crude oil as crude oil with American Petroleum Institute (API) gravity less than 24 degrees. We define medium crude oil as crude oil with API gravity between 24 and 35 degrees. We define light crude oil as crude oil with API gravity higher than 35 degrees.

47

The table below summarizes certain market indicators relating to our operating results as reported by Platts.

	Three Months Ended   June 30,						Six Months Ended   June 30,
	2017			2016			2017			2016
	(dollars per barrel, except as noted)
Dated Brent Crude	$	49.69		$	45.65		$	51.61		$	40.08
West Texas Intermediate (WTI) crude oil	$	48.11		$	45.53		$	49.89		$	39.64
Light Louisiana Sweet (LLS) crude oil	$	50.17		$	47.39		$	51.77		$	41.51
Alaska North Slope (ANS) crude oil	$	50.61		$	45.74		$	52.20		$	40.00
Crack Spreads
Dated Brent (NYH) 2-1-1	$	14.81		$	15.32		$	13.21		$	13.30
WTI (Chicago) 4-3-1	$	14.09		$	16.51		$	12.65		$	12.77
LLS (Gulf Coast) 2-1-1	$	12.56		$	10.76		$	12.30		$	9.76
ANS (West Coast) 4-3-1	$	19.16		$	18.58		$	17.85		$	18.04
Crude Oil Differentials
Dated Brent (foreign) less WTI	$	1.58		$	0.11		$	1.73		$	0.44
Dated Brent less Maya (heavy, sour)	$	8.00		$	7.83		$	7.34		$	7.94
Dated Brent less WTS (sour)	$	2.65		$	0.96		$	2.98		$	0.95
Dated Brent less ASCI (sour)	$	2.85		$	3.67		$	3.46		$	3.96
WTI less WCS (heavy, sour)	$	9.56		$	11.75		$	11.23		$	11.55
WTI less Bakken (light, sweet)	$	0.30		$	0.43		$	0.61		$	0.98
WTI less Syncrude (light, sweet)	$	(1.35	)	$	(2.72	)	$	(1.81	)	$	(3.56	)
WTI less LLS (light, sweet)	$	(2.06	)	$	(1.85	)	$	(1.88	)	$	(1.87	)
WTI less ANS (light, sweet)	$	(2.50	)	$	(0.21	)	$	(2.31	)	$	(0.37	)
Natural gas (dollars per MMBTU)	$	3.14		$	2.25		$	3.10		$	2.11

Three Months Ended June 30, 2017 Compared to the Three Months Ended June 30, 2016

Overview— Net loss was $205.4 million for the three months ended June 30, 2017 compared to net income of $181.5 million for the three months ended June 30, 2016.

Our results for the three months ended June 30, 2017 were negatively impacted by special items consisting of a non-cash lower of cost or market (“LCM”) inventory adjustment of approximately $151.1 million and debt extinguishment costs related to the early retirement of our 2020 Senior Secured Notes of $25.5 million. Our results for the three months ended June 30, 2016 were positively impacted by an LCM inventory adjustment of approximately $157.8 million. These LCM inventory adjustments were recorded due to movements in the price of crude oil and refined products in the periods presented. Excluding the impact of these special items, our results were negatively impacted by lower crack spreads at our East Coast and Mid-Continent refineries, lower throughput per day at our Delaware City and Toledo refineries as discussed below and the planned turnaround at our Torrance refinery. These negative impacts were partially offset by generally favorable movements in crude oil differentials, higher crack spreads for our Gulf Coast refinery and lower costs to comply with the RFS.

Revenues— Revenues totaled $5.0 billion for the three months ended June 30, 2017 compared to $3.9 billion for the three months ended June 30, 2016, an increase of approximately $1.2 billion, or 30.0%. Revenues per barrel were $61.25 and $60.70 for the three months ended June 30, 2017 and 2016, respectively, an increase of 0.9% directly related to higher hydrocarbon commodity prices. For the three months ended June 30, 2017, the total throughput rates at our East Coast, Mid-Continent, Gulf Coast and West Coast refineries averaged approximately

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326,100 bpd, 154,600 bpd, 191,300 bpd, and 97,200 bpd, respectively. For the three months ended June 30, 2016, the total throughput rates at our East Coast, Mid-Continent and Gulf Coast refineries averaged approximately 351,700 bpd, 174,200 bpd and 172,200 bpd, respectively. The decrease in throughput rates at our East Coast and Mid-Continent refineries in 2017 compared to 2016 is primarily due to planned downtime at our Delaware City refinery in 2017 and market conditions at our Toledo refinery. Our Gulf Coast refinery throughput rates increased in the second quarter of 2017 as compared to the same period of 2016 following the completion of a planned turnaround in the first quarter of 2017. Our West Coast refinery was not acquired until the third quarter of 2016 and was undergoing a turnaround for a majority of the second quarter of 2017. For the three months ended June 30, 2017, the total barrels sold at our East Coast, Mid-Continent, Gulf Coast and West Coast refineries averaged approximately 369,000 bpd, 161,500 bpd, 237,700 bpd and 131,200 bpd, respectively. For the three months ended June 30, 2016, the total barrels sold at our East Coast, Mid-Continent and Gulf Coast refineries averaged approximately 385,300 bpd, 180,000 bpd and 211,800 bpd, respectively. Total refined product barrels sold were higher than throughput rates, reflecting sales from inventory as well as sales and purchases of refined products outside the refinery.

Gross Margin— Gross margin, including refinery operating expenses and depreciation, totaled a loss of $105.1 million, or a loss of $1.49 per barrel of throughput, for the three months ended June 30, 2017 compared to $251.9 million, or $3.96 per barrel of throughput, for the three months ended June 30, 2016, a decrease of approximately $357.1 million. Gross refining margin (as described below in Non-GAAP Financial Measures) totaled $350.4 million, or $5.01 per barrel of throughput ($501.5 million or $7.17 per barrel of throughput excluding the impact of special items), for the three months ended June 30, 2017 compared to $571.0 million, or $8.98 per barrel of throughput ($413.2 million or $6.50 per barrel of throughput excluding the impact of special items) for the three months ended June 30, 2016, a decrease of approximately $220.6 million or an increase of $88.3 million excluding special items.

Excluding the impact of special items, gross margin and gross refining margin increased due to favorable movements in certain crude differentials, improved crack spreads and higher throughput rates in the Gulf Coast, reduced costs to comply with the RFS and positive margin contributions from our Torrance refinery acquired in the third quarter of 2016. Costs to comply with our obligation under the RFS totaled $68.8 million for the three months ended June 30, 2017 (excluding our West Coast refinery, whose costs to comply with RFS totaled $5.4 million for the three months ended June 30, 2017) compared to $93.2 million for the three months ended June 30, 2016. In addition, gross margin and gross refining margin were negatively impacted by a non-cash LCM inventory adjustment of approximately $151.1 million on a net basis resulting from a decrease in crude oil and refined product prices in comparison to both the prices at year end and the first quarter of 2017. The non-cash LCM inventory adjustment increased gross margin and gross refining margin by approximately $157.8 million in the second quarter of 2016.

Average industry refining margins in the Mid-Continent were weaker during the three months ended June 30, 2017 as compared to the same period in 2016. The WTI (Chicago) 4-3-1 industry crack spread was $14.09 per barrel, or 14.7% lower, in the three months ended June 30, 2017 as compared to $16.51 per barrel in the same period in 2016. Our margins were unfavorably impacted by our refinery specific crude slate in the Mid-Continent which was impacted by a declining WTI/Bakken differential, partially offset by an improving WTI/Syncrude differential, which averaged a premium of $1.35 per barrel during the three months ended June 30, 2017 as compared to a premium of $2.72 per barrel in the same period of 2016.

On the East Coast, the Dated Brent (NYH) 2-1-1 industry crack spread was approximately $14.81 per barrel, or 3.3% lower, in the three months ended June 30, 2017 as compared to $15.32 per barrel in the same period in 2016. The Dated Brent/WTI differential and Dated Brent/Maya differential were $1.47 and $0.17 higher, respectively, in the three months ended June 30, 2017 as compared to the same period in 2016, partially offset by a narrowing WTI/Bakken differential, which was approximately $0.13 per barrel less favorable in the three months ended June 30, 2017 as compared to the same period in 2016.

Gulf Coast industry refining margins generally improved during the three months ended June 30, 2017 as compared to the same period in 2016. The LLS (Gulf Coast) 2-1-1 industry crack spread was $12.56 per barrel,

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or 16.7% higher, in the three months ended June 30, 2017 as compared to $10.76 per barrel in the same period in 2016. Crude differentials weakened slightly with the WTI/LLS averaging a premium of $2.06 per barrel during the three months ended June 30, 2017 as compared to a premium of $1.85 per barrel in the same period of 2016.

Favorable movements in these benchmark crude differentials typically result in lower crude costs and positively impact our earnings while reductions in these benchmark crude differentials typically result in higher crude costs and negatively impact our earnings.

Operating Expenses— Operating expenses totaled $398.6 million, or $5.69 per barrel of throughput, for the three months ended June 30, 2017 compared to $271.5 million, or $4.27 per barrel of throughput, for the three months ended June 30, 2016, an increase of $127.0 million, or 46.8%. The increase in operating expenses was mainly attributable to costs associated with the Torrance refinery and related logistics assets which totaled approximately $115.0 million for the three months ended June 30, 2017. Total operating expenses for the three months ended June 30, 2017, excluding our Torrance refinery, increased slightly due to higher maintenance costs at our Chalmette refinery and slightly higher energy costs across all of our refineries attributable to strengthening natural gas prices. The increase in operating expenses was slightly offset by a decrease in outside services costs.

General and Administrative Expenses— General and administrative expenses totaled $34.9 million for the three months ended June 30, 2017 compared to $38.1 million for the three months ended June 30, 2016, a decrease of approximately $3.2 million or 8.3%. The decrease in general and administrative expenses for the three months ended June 30, 2017 over the same period of 2016 primarily relates to lower outside services costs in support of acquisitions and related integration activities of $3.1 million, reflecting less activity in the second quarter of 2017 and a decrease of $2.6 million in stock option expense. These decreases were partially offset by increased employee related expenses of $2.5 million mainly due to increased headcount as a result of the Torrance Acquisition. Our general and administrative expenses are comprised of the personnel, facilities and other infrastructure costs necessary to support our refineries.

Loss on Sale of Assets— There was a de minimis loss on sale of assets for the three months ended June 30, 2017 relating to non-operating refinery assets compared to a loss of $3.2 million on the sale of non-operating refinery assets for the three months ended June 30, 2016.

Depreciation and Amortization Expense— Depreciation and amortization expense totaled $63.0 million for the three months ended June 30, 2017 compared to $48.9 million for the three months ended June 30, 2016, an increase of $14.1 million. The increase was a result of additional depreciation expense associated with the assets acquired in the Torrance Acquisition and a general increase in our fixed asset base due to capital projects and turnarounds completed since the second quarter of 2016.

Change in Fair Value of Catalyst Leases— Change in the fair value of catalyst leases represented a gain of $1.1 million for the three months ended June 30, 2017 compared to a loss of $1.7 million for the three months ended June 30, 2016. These gains and losses relate to the change in value of the precious metals underlying the sale and leaseback of our refineries’ precious metals catalyst, which we are obligated to repurchase at fair market value on the lease termination dates.

Debt extinguishment costs - Debt extinguishment costs of $25.5 million incurred in the three months ended June 30, 2017 relate to nonrecurring charges associated with debt refinancing activity calculated based on the difference between the carrying value of the 2020 Senior Secured Notes on the date that they were reacquired and the amount for which they were reacquired. There were no such costs in the same period of 2016.

Interest Expense, net— Interest expense totaled $32.9 million for the three months ended June 30, 2017 compared to $31.3 million for the three months ended June 30, 2016, an increase of approximately $1.6 million. This net increase is attributable to higher borrowings under our Revolving Loan partially offset by lower letter of credit fees and higher interest income. Interest expense includes interest on long-term debt and notes payable, costs related to the sale and leaseback of our precious metals catalyst, financing costs associated with the A&R Inventory

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Intermediation Agreements with J. Aron, letter of credit fees associated with the purchase of certain crude oils, and the amortization of deferred financing costs.

Income Tax Expense— As PBF Holding is a limited liability company treated as a “flow-through” entity for income tax purposes, our consolidated financial statements generally do not include a benefit or provision for income taxes for the three months ended June 30, 2017 and June 30, 2016, respectively, apart from the income tax attributable to two subsidiaries acquired in connection with the Chalmette Acquisition in the fourth quarter of 2015 and our wholly-owned Canadian subsidiary, PBF Energy Limited (“PBF Ltd.”). The two subsidiaries acquired in connection with the Chalmette Acquisition are treated as C-Corporations for income tax purposes.

We incurred an net income tax expense of $5.9 million and a benefit of $5.3 million for the three months ended June 30, 2017 and June 30, 2016, respectively, reflecting net earnings from our taxable subsidiaries in the three months ended June 30, 2017 as compared to a net loss in the three months ended June 30, 2016.

Six Months Ended June 30, 2017 Compared to the Six Months Ended June 30, 2016

Overview— Net loss was $270.9 million for the six months ended June 30, 2017 compared to net income of $83.1 million for the six months ended June 30, 2016.

Our results for the six months ended June 30, 2017 were negatively impacted by special items consisting of a non-cash LCM inventory adjustment of approximately $167.1 million and debt extinguishment costs related to the early retirement of our 2020 Senior Secured Notes of $25.5 million. Our results for the six months ended June 30, 2016 were positively impacted by an LCM inventory adjustment of approximately $216.8 million. These LCM inventory adjustments were recorded due to movements in the price of crude oil and refined products in the periods presented. Excluding the impact of these special items, our results were positively impacted by generally favorable movements in crude oil differentials, higher crack spreads for our Gulf Coast refinery and lower costs to comply with the RFS. These positive impacts were partially offset by lower throughput per day at our Delaware City and Toledo refineries as discussed below and the planned turnaround at our Torrance refinery.

Revenues— Revenues totaled $9.8 billion for the six months ended June 30, 2017 compared to $6.7 billion for the six months ended June 30, 2016, an increase of approximately $3.1 billion, or 46.7%. Revenues per barrel were $61.57 and $54.25 for the six months ended June 30, 2017 and 2016, respectively, an increase of 13.5% directly related to higher hydrocarbon commodity prices. For the six months ended June 30, 2017, the total throughput rates at our East Coast, Mid-Continent, Gulf Coast and West Coast refineries averaged approximately 323,200 bpd, 139,300 bpd, 173,600 bpd, and 117,600 bpd, respectively. For the six months ended June 30, 2016, the total throughput rates at our East Coast, Mid-Continent and Gulf Coast refineries averaged approximately 333,900 bpd, 165,900 bpd and 174,200 bpd, respectively. The decrease in throughput rates at our East Coast refineries in 2017 compared to 2016 is primarily due to planned downtime at our Delaware City refinery in 2017. The decrease in throughput rates at our Mid-Continent and Gulf Coast refineries in the first six months of 2017 was mainly due to unplanned downtime and less favorable market conditions at our Toledo refinery and planned downtime at our Chalmette refinery during the first quarter of 2017. Our West Coast refinery was not acquired until the third quarter of 2016. For the six months ended June 30, 2017, the total barrels sold at our East Coast, Mid-Continent, Gulf Coast and West Coast refineries averaged approximately 357,100 bpd, 157,200 bpd, 215,800 bpd and 146,000 bpd, respectively. For the six months ended June 30, 2016, the total barrels sold at our East Coast, Mid-Continent and Gulf Coast refineries averaged approximately 376,200 bpd, 174,900 bpd and 208,800 bpd, respectively. Total refined product barrels sold were higher than throughput rates, reflecting sales from inventory as well as sales and purchases of refined products outside the refinery.

Gross Margin— Gross margin, including refinery operating expenses and depreciation, totaled a loss of $97.5 million, or a loss of $0.71 per barrel of throughput, for the six months ended June 30, 2017 compared to $256.9 million, or $2.09 per barrel of throughput, for the six months ended June 30, 2016, a decrease of $354.4 million. Gross refining margin (as described below in Non-GAAP Financial Measures) totaled $848.9 million, or $6.22 per barrel of throughput ($1,016.0 million or $7.45 per barrel of throughput excluding the impact of special items), for the six months ended June 30, 2017 compared to $925.2 million, or $7.54 per barrel of throughput

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($708.4 million or $5.77 per barrel of throughput excluding the impact of special items) for the six months ended June 30, 2016, a decrease of approximately $76.4 million or an increase of $307.6 million excluding special items.

Excluding the impact of special items, gross margin and gross refining margin increased due to favorable movements in certain crude differentials, improved crack spreads in the Gulf Coast, reduced costs to comply with the RFS and positive margin contributions from our Torrance refinery acquired in the third quarter of 2016. Costs to comply with our obligation under the RFS totaled $104.9 million for the six months ended June 30, 2017 (excluding our West Coast refinery, whose costs to comply with RFS totaled $14.8 million for the six months ended June 30, 2017) compared to $157.2 million for the six months ended June 30, 2016. In addition, gross margin and gross refining margin were negatively impacted by a non-cash LCM inventory adjustment of approximately $167.1 million on a net basis resulting from a decrease in crude oil and refined product prices in comparison to the prices at year end. The non-cash LCM inventory adjustment increased gross margin and gross refining margin by approximately $216.8 million for the six months ended June 30, 2016.

Average industry refining margins in the Mid-Continent were weaker during the six months ended June 30, 2017 as compared to the same period in 2016. The WTI (Chicago) 4-3-1 industry crack spread was $12.65 per barrel, or 0.9% lower, in the six months ended June 30, 2017 as compared to $12.77 per barrel in the same period in 2016. Our margins were unfavorably impacted by our refinery specific crude slate in the Mid-Continent which was impacted by a declining WTI/Bakken differential partially offset by an improving WTI/Syncrude differential, which averaged a premium of $1.81 per barrel during the six months ended June 30, 2017 as compared to a premium of $3.56 per barrel in the same period of 2016.

On the East Coast, the Dated Brent (NYH) 2-1-1 industry crack spread was approximately $13.21 per barrel, or 0.7% lower in the six months ended June 30, 2017 as compared to $13.30 per barrel in the same period in 2016. The Dated Brent/Maya differentials were $0.60 lower in the six months ended June 30, 2017 as compared to the same period in 2016. The Dated Brent/WTI differentials were $1.29 higher in the six months ended June 30, 2017 as compared to the same period in 2016, partially offset by a narrowing WTI/Bakken differential, which was approximately $0.37 per barrel less favorable in the six months ended June 30, 2017 as compared to the same period in 2016.

Gulf Coast industry refining margins generally improved during the six months ended June 30, 2017 as compared to the same period in 2016. The LLS (Gulf Coast) 2-1-1 industry crack spread was $12.30 per barrel, or 26.0% higher, in the six months ended June 30, 2017 as compared to $9.76 per barrel in the same period in 2016. Crude differentials slightly decreased with the WTI/LLS averaging a premium of $1.88 per barrel during the six months ended June 30, 2017 as compared to a premium of $1.87 per barrel in the same period of 2016.

Favorable movements in these benchmark crude differentials typically result in lower crude costs and positively impact our earnings while reductions in these benchmark crude differentials typically result in higher crude costs and negatively impact our earnings.

Operating Expenses— Operating expenses totaled $835.4 million, or $6.12 per barrel of throughput, for the six months ended June 30, 2017 compared to $568.2 million, or $4.63 per barrel of throughput, for the six months ended June 30, 2016, an increase of $267.2 million, or 47.0%. The increase in operating expenses was mainly attributable to costs associated with the Torrance refinery and related logistics assets which totaled approximately $242.5 million for the six months ended June 30, 2017. Total operating expenses for the six months ended June 30, 2017, excluding our Torrance refinery, increased slightly due to higher maintenance costs at our Chalmette refinery and slightly higher energy costs across all of our refineries attributable to strengthening natural gas prices. The increase in operating expenses was partially offset by a decrease in outside services costs.

General and Administrative Expenses— General and administrative expenses totaled $75.4 million for the six months ended June 30, 2017 compared to $71.4 million for the six months ended June 30, 2016, an increase of approximately $4.0 million or 5.7%. The increase in general and administrative expenses for the six months ended June 30, 2017 over the same period of 2016 primarily relates to increased employee related expenses of $6.8 million mainly due to increased headcount resulting from the Torrance Acquisition, an increase of $0.1 million

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in stock option expense and an increase of $2.0 million in information technology costs. These increases were partially offset by lower outside services costs in support of acquisitions and related integration activities of $5.9 million, reflecting less activity in 2017. Our general and administrative expenses are comprised of the personnel, facilities and other infrastructure costs necessary to support our refineries.

Loss on Sale of Assets— There was a loss of $0.9 million on sale of assets for the six months ended June 30, 2017 relating to non-operating refinery assets as compared to a loss of $3.2 million on the sale of assets for the six months ended June 30, 2016 relating to the sale of non-operating refinery assets in the second quarter of 2016.

Depreciation and Amortization Expense— Depreciation and amortization expense totaled $118.7 million for the six months ended June 30, 2017 compared to $103.2 million for the six months ended June 30, 2016, an increase of $15.5 million. The increase was a result of additional depreciation expense associated with the assets acquired in the Torrance Acquisition and a general increase in our fixed asset base due to capital projects and turnarounds completed since the second quarter of 2016.

Change in Fair Value of Catalyst Leases— Change in the fair value of catalyst leases represented a loss of $1.5 million for the six months ended June 30, 2017 compared to a loss of $4.6 million for the six months ended June 30, 2016. These losses relate to the change in value of the precious metals underlying the sale and leaseback of our refineries’ precious metals catalyst, which we are obligated to repurchase at fair market value on the lease termination dates.

Debt extinguishment costs - Debt extinguishment costs of $25.5 million incurred in the six months ended June 30, 2017 relate to nonrecurring charges associated with debt refinancing activity calculated based on the difference between the carrying value of the 2020 Senior Secured Notes on the date that they were reacquired and the amount for which they were reacquired. There were no such costs in the same period of 2016.

Interest Expense, net— Interest expense totaled $63.5 million for the six months ended June 30, 2017 compared to $64.6 million for the six months ended June 30, 2016, a decrease of approximately $1.0 million. This net decrease is mainly attributable to lower letter of credit fees, higher interest income and reduced amounts outstanding under our affiliate notes payable, partially offset by higher interest expense associated with higher borrowings under our Revolving Loan. Interest expense includes interest on long-term debt and notes payable, costs related to the sale and leaseback of our precious metals catalyst, financing costs associated with the A&R Inventory Intermediation Agreements with J. Aron, letter of credit fees associated with the purchase of certain crude oils, and the amortization of deferred financing costs.

Income Tax Expense— As PBF Holding is a limited liability company treated as a “flow-through” entity for income tax purposes, our consolidated financial statements generally do not include a benefit or provision for income taxes for the six months ended June 30, 2017 and June 30, 2016, respectively, apart from the income tax attributable to two subsidiaries acquired in connection with the Chalmette Acquisition in the fourth quarter of 2015 and our wholly-owned Canadian subsidiary, PBF Ltd.. The two subsidiaries acquired in connection with the Chalmette Acquisition are treated as C-Corporations for income tax purposes.

Income tax expense was $6.3 million and $27.0 million for the six months ended June 30, 2017 and June 30, 2016, respectively. Income tax expense for the six months ended June 30, 2016 included a charge of $30.7 million related to a correction of prior periods.

Non-GAAP Financial Measures

Management uses certain financial measures to evaluate our operating performance that are calculated and presented on the basis of methodologies other than in accordance with GAAP (“non-GAAP”). These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP, and our calculations thereof may not be comparable to similarly entitled measures reported by other companies.

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Special Items

The non-GAAP measures presented include EBITDA excluding special items, and gross refining margin excluding special items. The special items for the periods presented relate to an LCM inventory adjustment and debt extinguishment costs (as further explained in “Notes to Non-GAAP Financial Measures” below on page 57). Although we believe that non-GAAP financial measures, excluding the impact of special items, provide useful supplemental information to investors regarding the results and performance of our business and allow for helpful period-over-period comparisons, such non-GAAP measures should only be considered as a supplement to, and not as a substitute for, or superior to, the financial measures prepared in accordance with GAAP.

Gross Refining Margin and Gross Refining Margin Excluding Special Items

Gross refining margin is defined as gross margin excluding depreciation and operating expenses related to the refineries. We believe both gross refining marginand gross refining margin excluding special items are important measures of operating performance and provide useful information to investors because they are helpful metric comparisons to the industry refining margin benchmarks, as the refining margin benchmarks do not include a charge for refinery operating expenses and depreciation. In order to assess our operating performance, we compare our gross refining margin (revenue less cost of products and other) to industry refining margin benchmarks and crude oil prices as defined in the table below.

Neither gross refining margin nor gross refining margin excluding special items should be considered an alternative to gross margin, operating income, net cash flows from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Gross refining margin and gross refining margin excluding special items presented by other companies may not be comparable to our presentation, since each company may define these terms differently. The following table presents our GAAP calculation of gross margin and a reconciliation of gross refining margin to the most directly comparable GAAP financial measure, gross margin, on a historical basis, as applicable, for each of the periods indicated (in thousands, except per barrel amounts):

	Three Months Ended June 30,
	2017						2016
	$			per barrel of throughput			$			per barrel of throughput
Calculation of gross margin:
Revenues	$	5,013,251		$	71.62		$	3,855,773		$	60.70
Less: Cost of products and other	4,662,833			66.61			3,284,748			51.72
Less: Refinery operating expenses	398,570			5.69			271,539			4.27
Less: Refinery depreciation expenses	56,973			0.81			47,540			0.75
Gross margin	$	(105,125	)	$	(1.49	)	$	251,946		$	3.96
Reconciliation of gross margin to gross refining margin:
Gross margin	$	(105,125	)	$	(1.49	)	$	251,946		$	3.96
Add: Refinery operating expenses	398,570			5.69			271,539			4.27
Add: Refinery depreciation expense	56,973			0.81			47,540			0.75
Gross refining margin	$	350,418		$	5.01		$	571,025		$	8.98
Special items:
Add: Non-cash LCM inventory adjustment (1)	151,095			2.16			(157,780		)	(2.48		)
Gross refining margin excluding special items	$	501,513		$	7.17		$	413,245		$	6.50

——————————

See Notes to Non-GAAP Financial Measures on page 57

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	Six Months Ended June 30,
	2017						2016
	$			per barrel of throughput			$			per barrel of throughput
Calculation of gross margin:
Revenues	$	9,763,449		$	71.57		$	6,655,958		$	54.25
Less: Cost of products and other	8,914,587			65.35			5,730,731			46.71
Less: Refinery operating expenses	835,423			6.12			568,178			4.63
Less: Refinery depreciation expenses	110,900			0.81			100,136			0.82
Gross margin	$	(97,461	)	$	(0.71	)	$	256,913		$	2.09
Reconciliation of gross margin to gross refining margin:
Gross margin	$	(97,461	)	$	(0.71	)	$	256,913		$	2.09
Add: Refinery operating expenses	835,423			6.12			568,178			4.63
Add: Refinery depreciation expense	110,900			0.81			100,136			0.82
Gross refining margin	$	848,862		$	6.22		$	925,227		$	7.54
Special items:
Add: Non-cash LCM inventory adjustment (1)	167,134			1.23			(216,843		)	(1.77		)
Gross refining margin excluding special items	$	1,015,996		$	7.45		$	708,384		$	5.77

——————————

See Notes to Non-GAAP Financial Measures on page 57

EBITDA, EBITDA Excluding Special Items and Adjusted EBITDA

Our management uses EBITDA (earnings before interest, income taxes, depreciation and amortization), EBITDA excluding special items and Adjusted EBITDA as measures of operating performance to assist in comparing performance from period to period on a consistent basis and to readily view operating trends, as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations, and in communications with our board of directors, creditors, analysts and investors concerning our financial performance. Our outstanding indebtedness for borrowed money and other contractual obligations also include similar measures as a basis for certain covenants under those agreements which may differ from the Adjusted EBITDA definition described below.

EBITDA, EBITDA excluding special items and Adjusted EBITDA are not presentations made in accordance with GAAP and our computation of EBITDA, EBITDA excluding special items and Adjusted EBITDA may vary from others in our industry. In addition, Adjusted EBITDA contains some, but not all, adjustments that are taken into account in the calculation of the components of various covenants in the agreements governing the Senior Notes and other credit facilities. EBITDA, EBITDA excluding special items and Adjusted EBITDA should not be considered as alternatives to operating income (loss) or net income (loss) as measures of operating performance. In addition, EBITDA, EBITDA excluding special items and Adjusted EBITDA are not presented as, and should not be considered, an alternative to cash flows from operations as a measure of liquidity. Adjusted EBITDA is defined as EBITDA before adjustments for items such as equity-based compensation expense, gains (losses) from certain derivative activities and contingent consideration, the non-cash change in the deferral of gross profit related to the sale of certain finished products, the write down of inventory to the LCM, and debt extinguishment costs related to refinancing activities. Other companies, including other companies in our industry, may calculate EBITDA, EBITDA excluding special items and Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures. EBITDA, EBITDA excluding special items and Adjusted EBITDA also have limitations as analytical tools and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations include that EBITDA, EBITDA excluding special items and Adjusted EBITDA:

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• do not reflect depreciation expense or our cash expenditures, or future requirements, for capital expenditures or contractual commitments;

• do not reflect changes in, or cash requirements for, our working capital needs;

• do not reflect our interest expense, or the cash requirements necessary to service interest or principal payments, on our debt;

• do not reflect realized and unrealized gains and losses from certain hedging activities, which may have a substantial impact on our cash flow;

• do not reflect certain other non-cash income and expenses; and

• exclude income taxes that may represent a reduction in available cash.

The following tables reconcile net income as reflected in our results of operations to EBITDA, EBITDA excluding special items and Adjusted EBITDA for the periods presented (in thousands):

	Three Months Ended   June 30,						Six Months Ended   June 30,
	2017			2016			2017			2016
Reconciliation of net income (loss) to EBITDA:
Net income (loss)	$	(205,376	)	$	181,504		$	(270,916	)	$	83,076
Add: Depreciation and amortization expense	62,993			48,919			118,683			103,212
Add: Interest expense, net	32,857			31,279			63,513			64,550
Add: Income tax expense (benefit)	5,898			(5,277		)	6,332			26,996
EBITDA	$	(103,628	)	$	256,425		$	(82,388	)	$	277,834
Special Items:
Add: Non-cash LCM inventory adjustment (1)	151,095			(157,780		)	167,134			(216,843		)
Add: Debt extinguishment costs (1)	25,451			—			25,451			—
EBITDA excluding special items	$	72,918		$	98,645		$	110,197		$	60,991
Reconciliation of EBITDA to Adjusted EBITDA:
EBITDA	$	(103,628	)	$	256,425		$	(82,388	)	$	277,834
Add: Stock based compensation	4,789			7,378			10,134			9,999
Add: Non-cash change in fair value of catalyst leases	(1,104		)	1,748			1,484			4,633
Add: Non-cash LCM inventory adjustment (1)	151,095			(157,780		)	167,134			(216,843		)
Add: Debt extinguishment costs (1)	25,451			—			25,451			—
Adjusted EBITDA	$	76,603		$	107,771		$	121,815		$	75,623

——————————

See Notes to Non-GAAP Financial Measures on page 57

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Notes to Non-GAAP Financial Measures

The following notes are applicable to the Non-GAAP Financial Measures above:

(1) Special items: In accordance with GAAP, we are required to state our inventories at the lower of cost or market. Our inventory cost is determined by the last-in, first-out (“LIFO”) inventory valuation methodology, in which the most recently incurred costs are charged to cost of sales and inventories are valued at base layer acquisition costs. Market is determined based on an assessment of the current estimated replacement cost and net realizable selling price of the inventory. In periods where the market price of our inventory declines substantially, cost values of inventory may exceed market values. In such instances, we record an adjustment to write down the value of inventory to market value in accordance with GAAP. In subsequent periods, the value of inventory is reassessed and an LCM inventory adjustment is recorded to reflect the net change in the LCM inventory reserve between the prior period and the current period.

The following table includes the lower of cost or market inventory reserve as of each date presented (in thousands):

	2017		2016
January 1,	$	595,988	$	1,117,336
March 31,	612,027		1,058,273
June 30,	763,122		900,493

The following table includes the corresponding impact of changes in the lower of cost or market inventory reserve on both operating income and net income for the periods presented (in thousands):

	Three Months Ended   June 30,					Six Months Ended   June 30,
	2017			2016		2017			2016
Net LCM inventory adjustment benefit (charge) in both operating and net income	$	(151,095	)	$	157,780	$	(167,134	)	$	216,843

Liquidity and Capital Resources

Overview

Our primary sources of liquidity are our cash flows from operations and borrowing availability under our credit facilities, as more fully described below. We believe that our cash flows from operations and available capital resources will be sufficient to meet our and our subsidiaries’ capital expenditure, working capital, distribution payments and debt service requirements for the next twelve months. However, our ability to generate sufficient cash flow from operations depends, in part, on petroleum oil market pricing and general economic, political and other factors beyond our control. We are in compliance as of June 30, 2017 with all of the covenants, including financial covenants, in all of our debt agreements.

Cash Flow Analysis

Cash Flows from Operating Activities

Net cash used in operating activities was $205.8 million for the six months ended June 30, 2017 compared to net cash provided by operating activities of $147.8 million for the six months ended June 30, 2016. Our operating cash flows for the six months ended June 30, 2017 included our net loss of $270.9 million, plus depreciation and amortization of $122.8 million, a non-cash charge of $167.1 million relating to an LCM inventory adjustment, debt extinguishment costs related to refinancing of our 2020 Senior Secured Notes of $25.5 million, pension and other post-retirement benefits costs of $21.1 million, equity-based compensation of $10.1 million, changes in the

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fair value of our catalyst leases of $1.5 million, deferred income taxes of $5.1 million, loss on sale of assets of $0.9 million and net distributions in excess of earnings from our investment in TVPC of $4.8 million, offset by a change in the fair value of our inventory repurchase obligations of $3.1 million. In addition, net changes in operating assets and liabilities reflected uses of cash of $290.8 million driven by the timing of inventory purchases, payments for accrued expenses and accounts payable and collections of accounts receivable. Our operating cash flows for the six months ended June 30, 2016 included our net income of $83.1 million, plus net non-cash charges relating to depreciation and amortization of $107.9 million, the change in the fair value of our inventory repurchase obligations of $26.2 million, deferred income taxes of $27.1 million, pension and other post-retirement benefits costs of $15.4 million, changes in the fair value of our catalyst leases of $4.6 million, equity-based compensation of $10.0 million and a loss on sale of assets of $3.2 million, partially offset by a non-cash benefit of $216.8 million relating to an LCM inventory adjustment. In addition, net changes in operating assets and liabilities reflected sources of cash of $87.2 million driven by the timing of inventory purchases, payments for accrued expenses and accounts payables and collections of accounts receivables.

Cash Flows from Investing Activities

Net cash used in investing activities was $417.7 million for the six months ended June 30, 2017 compared to net cash used in investing activities of $233.8 million for the six months ended June 30, 2016. The net cash flows used in investing activities for the six months ended June 30, 2017 was comprised of capital expenditures totaling $179.6 million, expenditures for refinery turnarounds of $214.4 million and expenditures for other assets of $23.7 million. Net cash used in investing activities for the six months ended June 30, 2016 was comprised of capital expenditures totaling $110.0 million, expenditures for refinery turnarounds of $106.6 million, expenditures for other assets of $21.3 million and a final net working capital settlement of $2.7 million associated with the acquisition of the Chalmette refinery, partially offset by $6.9 million of proceeds from the sale of assets.

Cash Flows from Financing Activities

Net cash provided by financing activities was $110.8 million for the six months ended June 30, 2017 compared to net cash provided by financing activities of $481.5 million for the six months ended June 30, 2016. For the six months ended June 30, 2017, net cash provided by financing activities consisted of a contribution from PBF LLC of $97.0 million and net cash proceeds of $22.4 million from the issuance of the 2025 Senior Notes net of cash paid to redeem the 2020 Senior Secured Notes and related issuance costs. Additionally, during the six months ended June 30, 2017, we made distributions to members of $5.3 million and principal amortization payments of the PBF Rail Term Loan of $3.3 million. Further, during the six months ended June 30, 2017, we borrowed and repaid $290.0 million under our Revolving Loan resulting in no net change to amounts outstanding for the six months ended June 30, 2017. For the six months ended June 30, 2016, net cash provided by financing activities consisted primarily of proceeds from the Revolving Loan of $550.0 million and a net increase of $0.1 million in proceeds from affiliate notes payable partially offset by $61.7 million of distribution to members and repayments of the PBF Rail revolving credit facility of $7.0 million.

Liquidity

As of June 30, 2017, our total liquidity was approximately $894.8 million, compared to total liquidity of approximately $1,161.3 million as of December 31, 2016. Total liquidity is the sum of our cash and cash equivalents plus the estimated amount available under the Revolving Loan.

Working Capital

Our working capital at June 30, 2017 was $627.1 million, consisting of $2,695.4 million in total current assets and $2,068.3 million in total current liabilities. Our working capital at December 31, 2016 was $1,111.0 million, consisting of $3,154.3 million in total current assets and $2,043.3 million in total current liabilities. Working capital has decreased primarily as a result of capital expenditures, including turnaround costs, during the six months ended June 30, 2017.

Capital Spending

Net capital spending was $417.7 million for the six months ended June 30, 2017, which primarily included turnaround costs, safety related enhancements and facility improvements at the refineries. We currently expect to spend an aggregate of approximately between $575.0 million to $600.0 million in net capital expenditures during the full year 2017 for facility improvements and refinery maintenance and turnarounds. Significant capital spending

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plans for the full year 2017 include turnarounds for the FCC at our Delaware City refinery, several units at our Torrance refinery and several units at our Chalmette refinery, as well as expenditures to meet Tier 3 requirements.

Crude and Feedstock Supply Agreements

Certain of our purchases of crude oil under our agreements with foreign national oil companies require that we post letters of credit and arrange for shipment. We pay for the crude when invoiced, at which time the letters of credit are lifted. Our crude and feedstock supply agreements with PDVSA provide that the crude oil can be processed at any of our East and Gulf Coast refineries. In connection with the Torrance Acquisition, we entered into a crude supply agreement with ExxonMobil to deliver crude oil to our Torrance refinery.

Inventory Intermediation Agreements

On May 4, 2017, we and our subsidiaries, DCR and PRC, entered into amendments to the inventory intermediation agreements (as amended in the second quarter of 2017, the "A&R Intermediation Agreements") with J. Aron, pursuant to which certain terms of the existing inventory intermediation agreements were amended, including, among other things, pricing and an extension of the terms. The A&R Intermediation Agreement by and among J. Aron, us and PRC relating to the Paulsboro refinery extends the term to January 2, 2018, which term may be further extended by mutual consent of the parties to July 1, 2019. The A&R Intermediation Agreement by and among J. Aron, us and DCR relating to the Delaware City refinery extends the term to July 1, 2019, which term may be further extended by mutual consent of the parties to July 1, 2020.

Pursuant to each A&R Intermediation Agreement, J. Aron continues to purchase and hold title to certain of the intermediate and finished products (the “Products”) produced by the Paulsboro and Delaware City refineries (the “Refineries”), respectively, and delivered into tanks at the Refineries. Furthermore, J. Aron agrees to sell the Products back to the Refineries as the Products are discharged out of the Refineries’ tanks. J. Aron has the right to store the Products purchased in tanks under the A&R Intermediation Agreements and will retain these storage rights for the term of the agreements. We continue to market and sell independently to third parties.

At June 30, 2017, the LIFO value of intermediates and finished products owned by J. Aron included within inventory on our balance sheet was $300.9 million. We accrue a corresponding liability for such intermediates and finished products.

Off-Balance Sheet Arrangements and Contractual Obligations and Commitments

We have no off-balance sheet arrangements as of June 30, 2017, other than outstanding letters of credit in the amount of approximately $442.6 million and operating leases.

Distribution Policy

On August 3, 2017 PBF Energy, PBF Holding’s indirect parent, announced a dividend of $0.30 per share on outstanding Class A common stock. The dividend is payable on August 31, 2017 to Class A common stockholders of record at the close of business on August 15, 2017. If necessary, PBF Holding will make a distribution of up to approximately $34.1 million to PBF LLC, which in turn will make pro-rata distributions to its members, including PBF Energy. PBF Energy will then use this distribution to fund the dividend payments to the stockholders of PBF Energy.

As of June 30, 2017, we had $894.8 million of unused borrowing availability, which includes our cash and cash equivalents of $114.0 million, under the Revolving Loan to fund our operations, if necessary. Accordingly, as of June 30, 2017, there was sufficient cash and cash equivalents and borrowing capacity under our credit facilities available to make distributions to PBF LLC, in order for PBF LLC, if necessary, to make pro rata distributions to its members, including PBF Energy, necessary to fund in excess of one year’s cash dividend payments by PBF Energy.

Since, as described above, there was sufficient cash and cash equivalents and borrowing capacity as of June 30, 2017, we would have been permitted under our debt agreements to make these distributions; however, our ability to continue to comply with our debt covenants is, to a significant degree, subject to our operating results, which are dependent on a number of factors outside of our control. We believe our and our subsidiaries’ available cash and cash equivalents, other sources of liquidity to operate our business and operating performance provides us with a reasonable basis for our assessment that we can support PBF Energy’s intended distribution policy.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risks, including changes in commodity prices and interest rates. Our primary commodity price risk is associated with the difference between the prices we sell our refined products and the prices we pay for crude oil and other feedstocks. We may use derivative instruments to manage the risks from changes in the prices of crude oil and refined products, natural gas, interest rates, or to capture market opportunities.

Commodity Price Risk

Our earnings, cash flow and liquidity are significantly affected by a variety of factors beyond our control, including the supply of, and demand for, crude oil, other feedstocks, refined products and natural gas. The supply of and demand for these commodities depend on, among other factors, changes in domestic and foreign economies, weather conditions, domestic and foreign political affairs, planned and unplanned downtime in refineries, pipelines and production facilities, production levels, the availability of imports, the marketing of competitive and alternative fuels, and the extent of government regulation. As a result, the prices of these commodities can be volatile. Our revenues fluctuate significantly with movements in industry refined product prices, our cost of sales fluctuates significantly with movements in crude oil and feedstock prices and our operating expenses fluctuate with movements in the price of natural gas. We manage our exposure to these commodity price risks through our supply and offtake agreements as well as through the use of various commodity derivative instruments.

We may use non-trading derivative instruments to manage exposure to commodity price risks associated with the purchase or sale of crude oil and feedstocks, finished products and natural gas outside of our supply and offtake agreements. The derivative instruments we use include physical commodity contracts and exchange-traded and over-the-counter financial instruments. We mark-to-market our commodity derivative instruments and recognize the changes in their fair value in our statements of operations.

At June 30, 2017 and December 31, 2016, we had gross open commodity derivative contracts representing 19.3 million barrels and 8.8 million barrels, respectively, with an unrealized net gain of $19.3 million and net loss of $3.5 million, respectively. The open commodity derivative contracts as of June 30, 2017 expire at various times during 2017.

We carry inventories of crude oil, intermediates and refined products (“hydrocarbon inventories”) on our balance sheet, the values of which are subject to fluctuations in market prices. Our hydrocarbon inventories totaled approximately 33.0 million barrels and 29.4 million barrels at June 30, 2017 and December 31, 2016, respectively. The average cost of our hydrocarbon inventories was approximately $77.13 and $80.50 per barrel on a LIFO basis at June 30, 2017 and December 31, 2016, respectively, excluding the impact of LCM inventory adjustments of approximately $763.1 million and $596.0 million, respectively. If market prices of our inventory decline to a level below our average cost, we may be required to further write down the carrying value of our hydrocarbon inventories to market.

Our predominant variable operating cost is energy, which is comprised primarily of natural gas and electricity. We are therefore sensitive to movements in natural gas prices. Assuming normal operating conditions, we annually consume a total of approximately 68 million MMBTUs of natural gas amongst our five refineries as of June 30, 2017. Accordingly, a $1.00 per MMBTU change in natural gas prices would increase or decrease our natural gas costs by approximately $68.0 million.

Compliance Program Price Risk

We are exposed to market risks related to the volatility in the price of RINs required to comply with the RFS. Our overall RINs obligation is based on a percentage of our domestic shipments of on-road fuels as established by the EPA. To the degree we are unable to blend the required amount of biofuels to satisfy our RINs obligation, we must purchase RINs on the open market. To mitigate the impact of this risk on our results of operations and cash flows we may purchase RINs when the price of these instruments is deemed favorable.

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In addition, we are exposed to risks associated with complying with federal and state legislative and regulatory measures to address greenhouse gas and other emissions. Requirements to reduce emissions could result in increased costs to operate and maintain our facilities as well as implement and manage new emission controls and programs put in place. For example, AB32 in California requires the state to reduce its GHG emissions to 1990 levels by 2020.

Interest Rate Risk

The maximum availability under our Revolving Loan is $2.64 billion. Borrowings under the Revolving Loan bear interest either at the Alternative Base Rate plus the Applicable Margin or at Adjusted LIBOR plus the Applicable Margin, all as defined in the Revolving Loan. If this facility was fully drawn, a 1.0% change in the interest rate would increase or decrease our interest expense by approximately $26.4 million annually.

In addition, the PBF Rail Term Loan, which bears interest at a variable rate, had an outstanding principal balance of $31.7 million at June 30, 2017. A 1.0% change in the interest rate would increase or decrease our interest expense by approximately $0.3 million annually, assuming the current outstanding principal balance on the PBF Rail Term Loan remained outstanding.

We also have interest rate exposure in connection with our A&R Intermediation Agreements under which we pay a time value of money charge based on LIBOR.

Credit Risk

We are subject to risk of losses resulting from nonpayment or nonperformance by our counterparties. We continue to closely monitor the creditworthiness of customers to whom we grant credit and establish credit limits in accordance with our credit policy.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures.

PBF Holding maintains a system of disclosure controls and procedures that is designed to provide reasonable assurance that information which is required to be disclosed is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to management in a timely manner. Under the supervision and with the participation of our management, including PBF Holding’s principal executive officer and the principal financial officer, we have evaluated the effectiveness of our system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of June 30, 2017. Based on that evaluation, PBF Holding’s principal executive officer and the principal financial officer have concluded that PBF Holding’s disclosure controls and procedures are effective as of June 30, 2017.

Changes in Internal Control Over Financial Reporting

Management has not identified any changes in PBF Holding’s internal controls over financial reporting during the quarter ended June 30, 2017 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

On July 24, 2013, the Delaware Department of Natural Resources and Environmental Control (“DNREC”) issued a Notice of Administrative Penalty Assessment and Secretary’s Order to Delaware City Refining for alleged air emission violations that occurred during the re-start of the refinery in 2011 and subsequent to the re-start. The penalty assessment seeks $460,200 in penalties and $69,030 in cost recovery for DNREC’s expenses associated with investigation of the incidents. We dispute the amount of the penalty assessment and allegations made in the order, and are in discussions with DNREC to resolve the assessment. It is possible that DNREC will assess a penalty in this matter but any such amount is not expected to be material to us.

As of November 1, 2015, we acquired Chalmette Refining, which was in discussions with the Louisiana Department of Environmental Quality (“LDEQ”) to resolve self-reported deviations from refinery operations relating to certain Clean Air Act Title V permit conditions, limits and other requirements. LDEQ commenced an enforcement action against Chalmette Refining on November 14, 2014 by issuing a Consolidated Compliance Order and Notice of Potential Penalty (the “Order”) covering deviations from 2009 and 2010. Chalmette Refining and LDEQ subsequently entered into a dispute resolution agreement, the enforcement of which has been suspended while negotiations are ongoing, which may include the resolution of deviations outside the periods covered by the Order. In February 2017, Chalmette Refining and the LDEQ met to resolve the issues under the Order, including the assessment of an administrative penalty against Chalmette Refining. Although a resolution has not been finalized, the administrative penalty is anticipated to be approximately $0.7 million, including environmental projects. To the extent the administrative penalty exceeds such amount, it is not expected to be material to us.

On January 24, 2017, in connection with a Clean Air Act inspection in May 2014 by the EPA to determine compliance with 40 CFR Subpart 68 Chemical Accident Prevention Provisions, the EPA notified the Chalmette refinery of its intent to bring an enforcement action on two (2) findings from the audit. In a letter received in June, 2017 the EPA stated that there are “no violations or areas of concern” at the Chalmette Refinery “for which EPA intends to take enforcement action” relative to the 2014 inspection.

On December 23, 2016, the Delaware City refinery received a Notice of Violation (“NOV”) from DNREC concerning a potential violation of the DNREC order authorizing the shipment of crude oil by barge from the refinery. The NOV alleges that DCR made shipments to locations other than the Paulsboro refinery in violation of the order and requests certain additional information. On February 7, 2017, DCR responded to the NOV. On March 10, 2017, DNREC issued an approximately $0.2 million fine in a Notice of Penalty Assessment and Secretary’s Order to the Delaware City refinery for violating the 2013 Secretary’s Order. DNREC’s investigation found that PBF Energy violated the 2013 Secretary’s Order throughout 2014, when it made 17 barge shipments of crude oil over 15 days to locations other than the Paulsboro refinery. DNREC determined that the Delaware City refinery had violated the order by failing to make timely and full disclosure to DNREC about the nature and extent of those shipments, and had misrepresented the number of shipments that went to other facilities. The penalty assessment and Secretary’s Order conclude that the 2013 Secretary’s Order was violated by the refinery by shipping crude oil from the Delaware City terminal to three locations other than the Paulsboro refinery, on 15 days in 2014, making a total of 17 separate barge shipments containing approximately 35.7 million gallons of crude oil in total. On April 28, 2017, DCR appealed the Notice of Penalty Assessment and Secretary’s Order. To the extent that the penalty and Secretary’s Order are upheld, there will not be a material adverse effect on the Company’s financial position, results of operations or cash flows.

On December 28, 2016, DNREC issued a Coastal Zone Act permit (the “Ethanol Permit”) to DCR allowing the utilization of existing tanks and existing marine loading equipment at their existing facilities to enable denatured ethanol to be loaded from storage tanks to marine vessels and shipped to offsite facilities. On January 13, 2017, the issuance of the Ethanol Permit was appealed by two environmental groups. On February 27, 2017, the Coastal Zone Industrial Board held a public hearing and dismissed the appeal, determining that the appellants did not have standing. The final opinion and order of the Board was issued March 16, 2017. The appellants filed an appeal of the Board’s decision with the Delaware Superior Court on March 30, 2017.

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On February 3, 2011, the EPA sent a request for information pursuant to Section 114 of the Clean Air Act to the Paulsboro refinery with respect to compliance with EPA standards governing flaring. On July 13, 2017, the U.S. Department of Justice filed with the Court the motion to enter the consent decree. The refinery is waiting for the Court to take action on the motion, at which point it will be officially lodged.

On February 14, 2017, the New Jersey Department of Environmental Protection (“NJDEP”) submitted a proposed Administrative Consent Order (“ACO”) which covers air emission violations from 2013 through 2016 and work practice standards that were not subject to an affirmative defense at the Paulsboro refinery (“PRC”). In settlement of the violations, the NJDEP has proposed that PRC pay a civil administrative penalty of $0.3 million, which includes $0.1 million for a supplemental environmental project. This offer was accepted. The supplemental environmental project has already been completed, and the remaining $0.2 million was paid to NJDEP in June 2017.

In connection with the acquisition of the Torrance refinery and related logistics assets, we assumed certain pre-existing environmental liabilities related to certain environmental remediation obligations to address existing soil and groundwater contamination and monitoring activities, which reflect the estimated cost of the remediation obligations. In addition, in connection with the acquisition of the Torrance refinery and related logistics assets, we purchased a ten year, $100.0 million environmental insurance policy to insure against unknown environmental liabilities. Furthermore, in connection with the acquisition, we assumed responsibility for certain specified environmental matters that occurred prior to our ownership of the refinery. Following the closing of the acquisition, the Torrance refinery has received a number of NOVs from a number of agencies, including the Southern California Air Quality Management District, (“SCAQMD”), California’s Division of Occupational Safety and Health (“CALOSHA”), the City of Torrance, and the Torrance Fire Department. No settlement or penalty demand in excess of $0.1 million has been made or received with respect to these notices. It is possible that SCAQMD, CALOSHA, the Torrance Fire Department and/or the City of Torrance will assess penalties in the other matters in excess of $0.1 million but any such amount is not expected to be material to us, individually or in the aggregate.

On September 2, 2011, prior to our ownership of the Chalmette refinery, the plaintiff in Vincent Caruso, et al. v. Chalmette Refining, L.L.C., filed an action on behalf of himself and other Louisiana residents who live or own property in St. Bernard Parish and Orleans Parish and whose property was allegedly contaminated and who allegedly suffered any personal or property damages as a result of an emission of spent catalyst, sulfur dioxide and hydrogen sulfide from the Chalmette refinery on September 6, 2010. Plaintiffs claim to have suffered injuries, symptoms, and property damage as a result of the release. Plaintiffs seek to recover unspecified damages, interest and costs. In August 2015, there was a mini-trial for four plaintiffs for property damage relating to home and vehicle cleaning. On April 12, 2016, the trial court rendered judgment limiting damages ranging from $100 to $500 for home cleaning and $25 to $75 for vehicle cleaning to the four plaintiffs. The trial court found Chalmette Refining and co-defendant Eaton Corporation (“Eaton”), to be solitarily liable for the damages. Chalmette Refining and Eaton filed an appeal in August 2016 of the judgment on the mini-trial. On June 28, 2017, the appellate court unanimously reversed the judgment awarding damages to the plaintiffs. On July 12, 2017, the plaintiffs filed for a rehearing of the appellate court judgment, which was denied on July 31, 2017. As a result of the appellate court’s judgment, the potential amount of the claims is not determinable. Depending upon the ultimate class size and the nature of the claims, the outcome may have a material adverse effect on our financial position, results of operations, or cash flows.

On February 14, 2017, the plaintiff in Adam Trotter v. ExxonMobil Corp., ExxonMobil Oil Corp., ExxonMobil Refining and Supply Company, et. al., filed a civil action against us in the Superior Court of the State of California, County of Los Angeles, Southwest District, claiming public nuisance, battery, a violation of civil rights under 42 U.S.C. §1983, intentional infliction of emotional distress, negligence and strict liability in tort and injuries and symptoms resulting from the February 18, 2015 electrostatic precipitator (“ESP”) explosion at the Torrance Refinery which was then owned and operated by Exxon. The City of Torrance and the SCAQMD are also named as defendants in the lawsuit. To the extent that plaintiff’s claims relate to the ESP explosion, Exxon has retained responsibility for any liabilities that would arise from the lawsuit. While we are evaluating the

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allegations and cannot currently estimate the amount or the timing of the resolution of this matter, we believe the outcome will not have a material impact on our financial position, results of operations or cash flows.

On February 17, 2017, in Arnold Goldstein, et al. v. Exxon Mobil Corporation, et al., PBF Energy Inc. and PBF Energy Company LLC, and our subsidiaries, PBF Energy Western Region LLC and Torrance Refining Company LLC and the manager of our Torrance refinery along with Exxon Mobil Corporation were named as defendants in a class action and representative action complaint filed on behalf of Arnold Goldstein, John Covas, Gisela Janette La Bella and others similarly situated. The complaint was filed in the Superior Court of the State of California, County of Los Angeles and alleges negligence, strict liability, ultrahazardous activity, a continuing private nuisance, a permanent private nuisance, a continuing public nuisance, a permanent public nuisance and trespass resulting from the February 18, 2015 electrostatic precipitator (“ESP”) explosion at the Torrance refinery which was then owned and operated by Exxon. The operation of the Torrance refinery by the PBF entities subsequent to our acquisition in July 2016 is also referenced in the complaint. To the extent that plaintiffs’ claims relate to the ESP explosion, Exxon has retained responsibility for any liabilities that would arise from the lawsuit pursuant to the agreement relating to the acquisition of the Torrance refinery. While we are evaluating the allegations and cannot currently estimate the amount or the timing of the resolution of this matter, we believe the outcome will not have a material impact on our financial position, results of operations or cash flows.

On February 15, 2017, we received another notification that EPA records indicated that we used potentially invalid RINs that were in fact verified under the EPA’s RIN Quality Assurance Program (“QAP”) by an independent auditor as QAP A RINs. Under the regulations use of potentially invalid QAP A RINs provided the user with an affirmative defense from civil penalties provided certain conditions are met. We have asserted the affirmative defense and if accepted by the EPA will not be required to replace these RINs and will not be subject to civil penalties under the program. It is reasonably possible that the EPA will not accept our defense and may assess penalties in these matters but any such amount is not expected to have a material impact on our financial position, results of operations or cash flows.

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Item 6. Exhibits

The exhibits listed in the accompanying Exhibit Index are filed or incorporated by reference as part of this report and such Exhibit Index is incorporated herein by reference.

EXHIBIT INDEX

Exhibit Number	Description
4.1	Indenture dated as of May 30, 2017, among PBF Holding Company LLC, PBF Finance Corporation, the Guarantors named on the signature pages thereto, Wilmington Trust, National Association, as Trustee and Deutsche Bank Trust Company Americas, as Paying Agent, Registrar, Transfer Agent and Authenticating Agent and Form of Note included as Exhibit A (incorporated by reference to Exhibit 4.1 of PBF Energy Inc.’s Current Report on Form 8-K (File No. 001-35764) filed on May 30, 2017).
4.3	Registration Rights Agreement dated May 30, 2017, among PBF Holding Company LLC and PBF Finance Corporation, the Guarantors named therein and Citi Global Markets Inc., as Representative of the several Initial Purchasers (incorporated by reference to Exhibit 4.3 of PBF Energy Inc.’s Current Report on Form 8-K (File No. 001-35764) filed on May 30, 2017).
10.1†	Amendment to the Intermediation Agreement dated as of May 4, 2017, among J. Aron & Company, PBF Holding Company LLC and Paulsboro Refining Company LLC (incorporated by reference to Exhibit 10.1 to PBF Energy Inc.’s Quarterly Report on Form 10-Q filed on August 3, 2017 (File No. 001-35764)).
10.2†	Amendment to the Intermediation Agreement dated as of May 4, 2017, among J. Aron & Company, PBF Holding Company LLC and Delaware City Refining Company LLC (incorporated by reference to Exhibit 10.1 to PBF Energy Inc.’s Quarterly Report on Form 10-Q filed on August 3, 2017 (File No. 001-35764)).
31.1*	Certification of Thomas J. Nimbley, Chief Executive Officer of PBF Holding Company LLC pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Erik Young, Chief Financial Officer of PBF Holding Company LLC pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1* (1)	Certification of Thomas J. Nimbley, Chief Executive Officer of PBF Holding Company LLC pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2* (1)	Certification of Erik Young, Chief Financial Officer of PBF Holding Company LLC pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

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*	Filed herewith.
†	Confidential treatment requested as to certain portions, which portions are omitted and filed separately with the Securities and Exchange Commission.
(1)	This exhibit should not be deemed to be “filed” for purposes of Section 18 of the Exchange Act.

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned, thereunto duly authorized.

		PBF Holding Company LLC
Date	August 8, 2017		By:	/s/ Erik Young
				Erik Young Senior Vice President, Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)
		PBF Finance Corporation
Date	August 8, 2017		By:	/s/ Erik Young
				Erik Young Senior Vice President, Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)

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EXHIBIT INDEX

Exhibit Number	Description
4.1	Indenture dated as of May 30, 2017, among PBF Holding Company LLC, PBF Finance Corporation, the Guarantors named on the signature pages thereto, Wilmington Trust, National Association, as Trustee and Deutsche Bank Trust Company Americas, as Paying Agent, Registrar, Transfer Agent and Authenticating Agent and Form of Note included as Exhibit A (incorporated by reference to Exhibit 4.1 of PBF Energy Inc.’s Current Report on Form 8-K (File No. 001-35764) filed on May 30, 2017).
4.3	Registration Rights Agreement dated May 30, 2017, among PBF Holding Company LLC and PBF Finance Corporation, the Guarantors named therein and Citi Global Markets Inc., as Representative of the several Initial Purchasers (incorporated by reference to Exhibit 4.3 of PBF Energy Inc.’s Current Report on Form 8-K (File No. 001-35764) filed on May 30, 2017).
10.1†	Amendment to the Intermediation Agreement dated as of May 4, 2017, among J. Aron & Company, PBF Holding Company LLC and Paulsboro Refining Company LLC (incorporated by reference to Exhibit 10.1 to PBF Energy Inc.’s Quarterly Report on Form 10-Q filed on August 3, 2017 (File No. 001-35764)).
10.2†	Amendment to the Intermediation Agreement dated as of May 4, 2017, among J. Aron & Company, PBF Holding Company LLC and Delaware City Refining Company LLC (incorporated by reference to Exhibit 10.1 to PBF Energy Inc.’s Quarterly Report on Form 10-Q filed on August 3, 2017 (File No. 001-35764)).
31.1*	Certification of Thomas J. Nimbley, Chief Executive Officer of PBF Holding Company LLC pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Erik Young, Chief Financial Officer of PBF Holding Company LLC pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1* (1)	Certification of Thomas J. Nimbley, Chief Executive Officer of PBF Holding Company LLC pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2* (1)	Certification of Erik Young, Chief Financial Officer of PBF Holding Company LLC pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

 ——————————

*	Filed herewith.
†	Confidential treatment requested as to certain portions, which portions are omitted and filed separately with the Securities and Exchange Commission.
(1)	This exhibit should not be deemed to be “filed” for purposes of Section 18 of the Exchange Act.

68