Good day everyone, welcome to the PBF Energy second quarter 2021 earnings conference call and webcast. At this time, all participants have been placed in a listen-only mode, the floor will be open for your questions following the management's prepared remarks. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. It is now my pleasure to turn the floor over to Colin Murray of Investor Relations. Sir, you may begin. Thank you, Laura. Good morning and welcome to today's call. With me today are Tom Nimbley, our CEO, Matt Lucey, our President, Erik Young, our CFO, and several other members of our management team. A copy of today's earnings release, including supplemental information, is available on our website. Before getting started, I'd like to direct your attention to the safe harbor statement contained in today's press release. In summary, it outlines that statements contained in the press release and on this call, which express the company's or management's expectations or predictions of the future, are forward-looking statements intended to be covered by the safe harbor provisions under federal securities laws. There are many factors that could cause actual results to differ from our expectations, including those we describe in our filings with the SEC. Consistent with our prior periods, we will discuss our results today excluding special items. In today's press release, we describe the non-cash special items included in our second quarter 2021 results. The cumulative impact of the special items increased net income by an after-tax benefit of approximately $200 million or $1.65 per share. As noted in our press release, we'll use certain non-GAAP measures while describing PBF's operating performance and financial results. For reconciliations of non-GAAP measures to the appropriate GAAP figure, please refer to the supplemental tables provided in today's press release. I'll now turn the call over to Tom Nimbley. Thanks, Colin. Good morning, everyone, and thank you for joining our call today. As we expected coming into this year, general market conditions are continuing to improve. Before providing comments on the market, I would like to address last week's decision by the board of the Bay Area Air Quality Management District to implement stricter particulate emission standards related to fluid catalytic cracking units, or FCCs. The board has set a numerical standard, and we have five years to meet it. Importantly, how we meet that standard is entirely up to us. They have not required us to install any specific technology, including a wet gas scrubber. As such, we will not have to incur the estimated $800 million that this project would conservatively have cost. What we are doing is progressing a project included in our capital plan for this year that will get us below a 0.02 emissions level, which is a long way towards the 0.01 level established by the recent rulemaking. After that project is complete, we will have time to test our emissions and identify possible changes that could potentially reduce emissions further. Last week's rulemaking was another step in an ongoing process. We anticipated the outcome. We expect that the rule or parts of the rule will likely face legal challenges, in which the California Environmental Quality Act requires a mandatory mediation between all parties. We appreciate the support we received from the building and trade unions, Western States Petroleum Association, and other business partners in our efforts to present alternatives that achieve the mutually desired goal of improving air quality while continuing to supply our products to one of the largest markets in our country. I want to reinforce the fact that we have many potential options and time to address the newly implemented standard. F ive years, which as one analyst noted last week, is a lifetime in refining. Moving to the present, the refining market has improved somewhat as we expected over the course of 2021. The recovery continues. Inventories have fallen back within historical bands. Demand is improving. With gasoline and distillate at or above pre-pandemic levels, jet demand has increased to 80%-85% of pre-pandemic levels, up from 65% earlier in the year. Benchmark cracks have improved during the quarter, driven in part by rising gasoline demand, but the realized crack continues to be hindered by the high costs associated with RINs. We saw a softening of the gasoline market late in the quarter, which in part was driven by an increase in imports. More recently, we've seen an improvement in gasoline margins as European demand has improved and refinery issues in other regions have reduced transatlantic shipments. On the crude side, ongoing discussions and production limits by OPEC+ have kept global crude prices elevated and the light-heavy spreads narrow. There appear now to be an agreement in principle that will allow the expected OPEC+ output increase to proceed through the rest of the year. We believe this could help maintain overall prices and provide incentives for more production to come to market. With the incremental crude being predominantly heavier, higher sulfur crude, we expect to see some additional widening of the light-heavy and sweet-sour spreads. Demand remains the key driver. Domestically, demand continues to gradually improve, and we see the next inflection point coming towards the end of the third quarter as the nation's students return to school, which will allow more parents to return to normal work routines. We expect as this occurs going forward, we will also see increasing business travel, which should incrementally improve jet demand and margins. Internationally, the recovery has been less consistent, but we expect those regions to recover, which should set the stage for gradual but sustained growth in product demand globally. With that, I will now turn the call over to Matt. Thanks, Tom. As Tom mentioned, market conditions are trending in the right direction. Our aggressive efforts to improve PBF's competitive position should help accelerate the company's recovery. In regards to the rulemaking in California, and as Tom mentioned, and I will say again, big takeaway from the rulemaking is that we will not be required to install a wet gas scrubber that was infeasible from a land, cost, and water use perspective. As part of the Martinez acquisition, Shell agreed to pay for new reactors for the refinery's cat feed hydrotreater. These reactors are on schedule to be delivered towards the end of the third quarter, and we intend to install them during scheduled work in the fourth quarter. The new reactors will reduce the sulfur and other particulate matter in the feed to the FCC. We believe the improved feed will directionally improve product quality and lead to a reduction in particulate emissions from our FCC to below 0.02. The installation of the reactors, which will amount to less than $20 million, was included in our initial capital planning for 2021 and represents zero incremental spend. The reduction in emissions will begin to be realized in the first quarter of 2022. Once we've had the time to evaluate the results of this project on our FCC emissions, we've identified additional potential changes that could further reduce emissions. Importantly, we will have over four and a half years to continue to work with the refinery and the AQMD to reach the new standard. In the second quarter, our refineries ran well at approximately 875,000 barrels a day of throughput. We expect to run similar volumes in the third quarter. We are now completing turnaround work at Torrance. The bulk of the work occurred in July and should be complete over the next 10 days or so. This turnaround is included in our throughput and capital guidance. Earlier this year, PBF announced a potential renewable diesel project at our Chalmette Refinery. Our project is intended to maximize the benefits of Chalmette's strategic location on the Gulf Coast, with its excellent access to water, rail, and truck logistics, as well as our synergistic California logistics footprint. We are progressing discussions with partners to develop the 20,000-barrel-a-day renewable diesel production facility, which would include a pretreatment unit. We've continued our detailed review of the project and expect that once we reach final investment decision, our project will be capable of coming on stream within 12 months at a significantly lower expected cost than similar announced projects. An important step in the process and in determining the economics of the project were the ongoing negotiations in Louisiana to secure state tax incentives to help bring this renewable fuels and economic development project to the region. We are pleased to announce that earlier this week, we received approval for these incentives. We work closely with the state and our neighbors in the St. Bernard Parish and wish to thank all those involved in advancing the project. With this necessary step accomplished, we look to finalize partner discussions and move to final investment decision in the coming months. In regard to RINs, I've said many times over the last 10 years the program is broken. You can say, what does that mean? The program is not administered fairly, and there are winners and losers on a massive scale. Furthermore, as currently administered, high RIN prices do not increase ethanol consumption. Simply put, the facts show that high RIN prices do not get the ethanol industry past the blend wall. Therefore, the program operates with an insurmountable annual shortfall. Now we've come to the point where if the program does not get fixed, it actually breaks. We are now more than halfway through the year and still do not have an RVO. If the RVO percentages are held constant in 2021, as they were in 2020, the RIN bank, which has been depleting, will actually run dry sometime, and potentially as soon as the end of this year. RINs are effectively permits to sell gasoline. If not enough RINs are available to meet the mandate, refiners will be forced to sell domestic gasoline proportional to the RIN supply. If at that point, the program still goes unaddressed, RIN prices will skyrocket beyond the ludicrous levels they are today. Consumers will be forced to ration gasoline consumption and pay even more exorbitant prices for the fuel that is available. Refiners will be forced to export gasoline, because if there are insufficient RINs, the gasoline cannot be sold domestically. Obviously, imports will be limited because there will not be enough RINs available. The EIA noted there was $800 million deficit in RIN generation in 2020 compared to what was needed to meet the RVO mandate. This means there was an equivalent drawdown in the RIN bank, which, according to EPA data, likely puts the bank at around $2.6 billion RINs as of the beginning of this year. If we look at current projections for demand and assume an RVO flat to 2020, the 2021's RIN requirement is over $2 billion RINs more than what we're on track to generate this year, according to EPA data. Say it differently. The current pace of RIN generation compared to the RVO will result in a $2.3 billion drawdown in the RIN bank in 2021, leaving only $300 million RINs remaining at the end of the year. At that rate, if both fuel demand and the RVO remain flat for next year, the market could quickly run out of RINs sometime in the first quarter of 2022, or perhaps sooner. The scenario above yet again highlights the fact that the RFS is dysfunctional. While I am hopeful that we will have action by the current administration that will enable us to have a workable program in the very near future, I am virtually certain the issues will need to be addressed before 2023, which is the outside compliance date for 2021 RINs if you choose to exercise a deferral for the 2021 program year. The EPA, Congress, and the administration have created uncertainty in the market with continued delays in setting the 2021 RVO and risk economic calamity and consumer outrage if they let the above scenario unfold. At this point, given recent news, we know the administration is aware of the situation and believe they will take action to avoid the crisis. Now I'll turn it over to Erik. Thanks, Matt. Today, PBF reported an adjusted loss of $1.26 per share for the second quarter and adjusted EBITDA of $2.1 million. Important to note, included in the adjusted EBITDA figure is approximately $60 million of net non-cash mark-to-market expense related to environmental credits. Our results include approximately $298 million of RINs expense during the second quarter. Consistent with our prior disclosure, this represents a full accrual of our expected RVO for the period, plus the mark-to-market adjustment for our carrying value of credits. Consolidated CapEx for the quarter was approximately $79 million, which includes $77 million for refining and corporate CapEx and $2 million for PBF Logistics. For the first half of 2021, capital expenditures totaled approximately $140 million. Consistent with prior guidance, we expect second half 2021 capital expenditures to be approximately $250 million-$300 million. Our financial results continue to improve as the pandemic recovery progresses. We believe the second quarter was an inflection point as we generated positive adjusted operating margin. We continue to believe the combination of an improving market backdrop and a more streamlined cost structure at PBF should continue to generate incremental positive cash flow. Our liquidity position remains consistent with more than $2.6 billion of total liquidity, including approximately $1.4 billion of cash at the end of the second quarter. We continue to prudently manage our balance sheet and financial resources to provide flexibility for the near term. Our full financial statements were released this morning. I would like to take a moment to help navigate one item in particular. In looking at our balance sheet, included in our accrued expense footnote, PBF reported accrued renewable energy credit and emissions obligations of approximately $1.1 billion. This figure includes roughly $400 billion related to our current and future California environmental credit obligations and roughly $700 billion related to RINs. Related to our California environmental credit obligations, we expect approximately $250 million of working capital outflows during the fourth quarter should satisfy more than $290 million of the $400 million accrual. Important to note, this payment represents the final obligation in a three-year compliance scheme. The $700 million RIN-related accrual consolidates our 2020 and 2021 compliance years. As we have previously mentioned, we currently expect to satisfy in full our 2020 obligation by the compliance deadline in January of 2022. In order to achieve this target, we expect to use approximately $200 million in net cash through the remainder of the year. In addition, our RIN accrual includes an incremental $100 million in fixed price commitments that we expect to cash settle throughout the remainder of the year. Having said that, the RIN market is dynamic, and depending on how the market moves, there may be opportunities to take advantage of market dislocations to improve our position. Important to note, the 2021 proposed RVO has yet to be published. This is a key factor in determining our overall strategy. As currently available under the program, we can defer some or all of our 2021 obligation to March of 2023. Operator, we've completed our opening remarks. We'd be pleased to take any questions. Our first question comes from the line of Roger Read with Wells Fargo. You may proceed with your question. Yeah, thank you. Good morning. Morning, Roger. Just to come back, I think first off on the macro, Erik, you made the comment about it seems like you hit an inflection point in Q2, and then you talked, Tom, earlier about crude diffs probably opening up with OPEC+ putting more oil on the market. Third quarter started a little weak but has really improved in the last couple of weeks. Do you see something that is fundamentally better as we're progressing? Would you attribute this to the typical volatility we see in margins? I recognize there's a whole bunch of things that affect what's going on on a daily basis, but I was just curious if things look a little bit better as you're paying attention to inventories, as you're paying attention to imports, and then the guidance you put out in terms of volumes for Q3. Yeah, Roger. There's a lot there, but you're spot on. I wish it was a little bit faster, but there's clearly improvements in the market from a variety of reasons. We're basically below historical averages on all major clean products. A little bit higher on jet, but not much. Within the -year band. Certainly there on gasoline and distillate. Distillate is below the five-year average. When we look at the cracks, they have been improving. We believe that's associated clearly with demand recovering. As I said, distillate has been holding up all year. In fact, even last year, it held up stronger than anything else, as you're well aware. In fact, is above pre-pandemic levels for this time in 2019. Gasoline is just about at that level and demand continues to improve. That's the key. To be honest, that is absolutely a key, in that if jet does not improve, that will keep the ability for the refiners to run more limited because of the jet limitations. That being said, the industry is running at 91% utilization. We have this demand getting back to levels of 2019, and we have over 1 million barrels a day less capacity than we had in that period of time. That's why utilization even is at 91%. Demand looks like it's recovering. Certainly, the inventories are in control. If you look at the light heavy spreads, sweet sour spreads, compare them to the beginning of the year, most of the heavier, higher sulfur crudes, Maya, Arab Medium, Kirkuk, all of the crudes that have higher sulfur have moved out about $2, a little more than $2 from the beginning of 2021 to now. As I said, when you start bringing on 400,000 barrels a day more crude each month, it's all going to be incrementally, basically medium heavy, higher sulfur crude, which should work to the advantage of high complexity refiners like PBF. Okay. Thanks for that. I know this is not something that gets answered in any one question, but as you think about the RFS and the RINs program, there's what you want and there's what might be achievable from a political standpoint. Thinking about what has happened previously with the Obama administration. They did at times tweak the RVO. The Trump administration, more of the SREs, which seems a little tougher solution here politically, given some recent legal issues and pushback from the RFA and all. I was just curious, I kind of get it. If you get rid of the program, you're happy, but that's not happening. What is it you think would be reasonable within the political framework maybe to see the EPA do between now and year-end? Is it as simple as simply resetting an RVO for 2021? Is the deficit that you highlighted for the RINs bank potentially so large that it has to be a step-out kind of decision? Not a tweak, but a rework. Hey, Roger. I would say a couple things. One, in regards to a solution, there are many solutions and there are many easy solutions. The first thing they need to do is make sure that the scarcity of RINs doesn't exist. The simplest solution, and one that has been talked a lot about, is simply setting the RVO at a level where RINs do not become so scarce. That's something that they could do with a snap of a finger. There's other opportunities they can do to rework the program. Indeed, we're sort of engaged on all fronts with our partners with the represented workforce. I think you alluded to it, there's no question about it, the Trump administration completely failed this program. They took away SREs, but we're reallocating the volume, so it was sort of a double damning event. They granted E15 year-round waiver, which was just overturned by the courts. I think the ethanol industry is scratching their heads saying, "Hey, how do we come to a workable solution now that Trump administration is gone?" I think there are other aspects to the program they can change, but the most simple one is setting an RVO that works for all the stakeholders. I think they understand that. We just need to get through the political process on that. Thank you. Our next question comes from the line of Phil Gresh with JPMorgan Chase. You may proceed with your question. Hey, good morning. Erik, thank you for all the color around the accrued expenses piece. Just a quick follow-up or two on that. One is, it looks like it's $550 million you're talking about in the second half of the year, and that number sounds consistent with the last quarter call, I believe. I guess, should I just infer that in the second quarter, I think there was an initial plan to maybe pay some of that in the second quarter? Was it just pushed to the second half? Related to that, I guess what you're implying is that about $500 million of the RINs is for 2021. Just wanted to confirm that number. Two quick responses on that. I think folks should assume, if we think about we had an overall RIN expense of almost $300 million during the quarter. We did ultimately spend a little north of $150 million on RINs throughout the course of the second quarter. At the same time, I think we've been fairly vocal. We've been active in the RIN market. Ultimately, there are incremental purchases that are made to cover certain forms of compliance. On a go-forward basis, I think the key message is, we today, included in the $700 million, there's about $400 million that ultimately is floating/non-fixed price commitments. Right? That's a mark-to-market adjustment. It's going to fluctuate. If RINs get cut in half, that $400 million goes down by 50%. The $300 million is what's remaining on the books, fixed price commitments, $200 million of which we've allocated to our 2020 compliance. That is our first priority at this point, is to ultimately show up at the end of January 2022 with our full RVO turned into the EPA. The remaining capital that we know we have earmarked through the remainder of the year involves the $250 million of AB 32 related compliance credits that we have a repurchase obligation that will ultimately hit in the fourth quarter. Okay, got it. I guess could you give us an update, Erik, on how you think about operating cash levels? I think in the past, you've given a $500 million number. I just wanted to see if that's something that would still hold in this current oil price environment. I think anywhere, again, price of crude oil will be a key determinant in what we feel comfortable carrying from a cash perspective. I think today, absent anything that we're dealing with in terms of coming out of the recovery following the pandemic, yes, I think $500 million is a more than reasonable number, and quite frankly, in a similar historical period, we've probably operated with between $250 million and $500 million of operating cash. I think that's a reasonable number, though, given the current market environment that we have for crude price in and around kind of a $70, $75 a barrel number. Okay, got it. That's very helpful. One last one. This would be for Matt. I think last quarter you were hoping perhaps to have a bit more color on renewable diesel on the progress of the project, I think by this point. You got the approval this week for the incentives, how much of that do you think was a factor in the next steps of this process, and the willingness to have partners step in versus, say, other things like feedstock or other issues you're still trying to figure out? It's a big project that has a lot of work streams that are simultaneous. Obviously, working with the state of Louisiana and bringing economic development potentially to that region. We are working that. We're working all aspects of it. Not only the engineering coming to final costs, working with potential partner and doing the diligence around a potential partner, as well as them doing the diligence around us, in addition to all the engineering work that you have to do on the front end to make sure that your project is going to be as viable as you think. We continue working on all fronts, and quite honestly, I would characterize it as sort of being right on schedule where we expect it to be. There's no big delays or anything We're going to have to assess the market and decide to go forward. That should be done in the very near future. Okay. Thank you. Our next question comes from the line of Theresa Chen with Barclays. You may proceed with your question. Morning. Tom, I'm curious to hear your view on what's happening in the East Coast currently. At this point, summer driving season is in full force and facilities in that area have rationalized capacity, including capacity at one of your own plants. Though the quarter was noisy due to Colonial being shut down for six days and imports and such. Looking past all of that, can you talk about what is happening on a capture front, or your expectations going forward on a normalized basis since there has been capacity rationalized and demand has rebounded, and yet we are in the midst of working through the volatility of imports from Europe and elsewhere, and that seems to have subsided at this point with the maintenance issues going on there. Just looking forward, what are your expectations for the East Coast? I think you're spot on in that there's been a lot of choppiness, particularly on the East Coast. That was once you get past the fact that certainly there's a lot more mobility in the East Coast as there is in the country. We're seeing that. A lot more cars on the road, people are returning to work, and we do expect, as we said, that even after we get past Labor Day and the traditional slowdown in the driving season might be countered by the fact that there will likely be more school buses on the road and more people coming back to work because their children have returned, hopefully to a more normal life. The big thing on the East Coast, the bad one, has clearly been the fact that there's been such a huge arb between Northwest Europe and the Med, and North America, and particularly the East Coast. Let's see, two weeks ago, we had imports of 1.4 million barrels a day, significantly higher than we had in 2019. I think one of the things that we're really looking for and hopeful on is in fact that Europe gets control of the pandemic or makes strides in, they seem to be doing in that area, and their business environment improves, and that is clearly happening. Cracks have moved up in the Med and in Northwest Europe by several dollars a barrel. They're not where they need to be, but certainly the imports, it was down last week. Yesterday's numbers were still elevated, but on a go-forward basis, it appears as though they will be dropping off. That in combination with what we said about continuing increasing in demand, we expect the cracks to continue to improve. I will say that we are pleased with how the East Coast reconfiguration is done specifically in our environment. It does appear to be working as we intended. We effectively took the strengths of two refineries and kept them and eliminated some of the weaknesses, and particularly in Paulsboro on the fuel side of the business. We hopefully will see continued improvement in PADD 1 and on the East Coast. Thank you. That's great color. Maybe turning to the West Coast, in light of the commentary that you gave on the Bay Area Air Quality Management District's new standard, and the projects and developments under contemplation to potentially meet that. It seems like that in itself is a moving target given the arbitration process upcoming. Just curious, in addition to the reactors that should decrease the particulate emissions below the 0.02 level, what other projects are you looking at that can further reduce that? Now let me just back up, great question, talk about the project itself that we are implementing. As Matt said, that was a project that was basically contemplated and negotiated as part of the acquisition itself. What we're doing is Shell has purchased these reactors, and these reactors are going to operate at a higher operational severity than the current reactors. They'll be able to run at a higher pressure, higher temperature. The reason we wanted to do this project initially, and importantly, is that by increasing the pressure in the reactors and the temperature in the reactors, it increases the amount of sulfur, nitrogen, aromatics, and metals that you take out of the feed to the cat cracker, which results in a higher yield pattern and a higher volume expansion across the FCC. It improves the quality of the cat feed. The sulfur, nitrogen, metals contribute to particulate matter. By taking it out in the cat feed hydrotreater, you reduce the particulate matter that is being emitted from the cat cracker, and that's how we can get down below 0.02. There are myriad ways of trying to make additional changes, including feedstock changes, using additives to try to see if you can inject additives to reduce the particulate matter further. Operational changes. Many things that we have already been contemplating, but we want to see what we can get and prove that we can get at least below 0.02. We think we're going to be able to do better than that. With this project, that'll allow us to take the time to work with the agency. This is going to be mediated, and I remain confident that we're going to get an acceptable outcome on this. Thank you. Our next question comes from the line of Doug Leggate with Bank of America. You may proceed with your question. Hey, guys. Tom, you gave a fairly thorough view as to how you're going to respond to this issue on the West Coast. I just wonder if you could kind of spell it out for us. You've got a reasonable amount of near-term flexibility to get below 0.02. What happens if the action as stated is fully enforced? What does that mean for you guys then in terms of potential additional spend? Well, as I said, we actually think there's not going to be a huge amount or a material amount of additional spend. We say it's going to be below 0.02. We think it's going to be better than that. The agency itself has modeled this reactor improvement and kind of agrees with that. We have to demonstrate that. We got to get the project online and see what our new baseline is. If it is where we think, we think that we're going to get very either there, maybe not there, but very close to there with the operational changes and maybe use of additives, as I said. We're not going to be putting in a very large project. That's clear. We have to first see what we get from this project and in the negotiation process or the mediation process, which is almost inevitable because some people are going to, maybe even us, would litigate this. We have to first see what we can get from the project, and I don't think we're going to wind up being in a bad position on this. Doug, it's important to note, we're replacing 50-year-old equipment with these new reactors. To Tom's point, there's a lot of computer modeling that's going on today. Until the full installation and implementation is concluded, we've got a lot of different knobs that we can turn. Folks need to understand these are very complex machines that we're operating out on the West Coast. Again, we feel confident that we're going to be making some progress. Let's get through the first part of 2022 when, again, we have a real live baseline and then can start changing different things and testing and going through the process that really needs to be concluded. Well, fellas, my follow-up is also related to this because obviously one of your large competitors out there was talking about they don't maybe have as good a solution as you guys might have, and they're talking about north of $1 billion of potential capital. I'm just wondering if you could offer any thoughts as to how you see, not so much how Chevron's situation plays out, but how you see the risk or upside to balances, product balances, in that market if they don't get their situation resolved. I'll leave it there. Yeah. We don't know what Chevron's going to do. Right now, the supply-demand situation, the balances as you refer to them in California, looks for the immediate next several years reasonably good. That's principally because we have Martinez, the former Avon refinery that's already been idled. We have Rodeo at Santa Maria for Phillips 66 that's in transition. Frankly, has already shut down one of the hydrocrackers in Rodeo and turned it into a renewable project. There's been a fair amount of capacity that's been taken offline. We see the California market being constructive once demand has come back. It really has come back. In the last weeks, yesterday's numbers were strong. We see the market being constructive. If obviously there were some additional steps taken, either because somebody decided to take equipment offline or one of the ways you can effectively reduce particular emissions is to reduce rates. If that became the case, you would obviously have some more capacity or throughput be reduced, and that would be further constructive to the marketplace. Appreciate you offering those perspectives, Tom. Thanks a lot. Our next question comes from the line of Paul Cheng with Scotiabank. You may proceed with your question. Hey, guys. Good morning. Good morning, Paul. Tom and Matt, not that it will happen, hopefully not, but if L.A. adopts a similar standard as Bay Area here, if Torrance have a similar elegant solution as what you see in Martinez or that wet gas scrubber is the only real solution for Torrance. That's not even been put on the table. Obviously we just, Exxon replaced the electrostatic precipitators after the explosion. We're in compliance. There are no issues. This has not been contemplated in the South Coast. We've been working for how long with this in the Bay Area? A whole year. Yeah. Since we took over. Since we took over, that's been a work in progress. The same situation doesn't exist down there. With the new precipitator, we're in full compliance, and there's no discussions in this regard at this time. Okay. Just curious that, I mean, this year your CapEx is about $400-$450. How long can you spend just at this level, let's say over the next several years, if the market condition did not move in the right direction as we hope? Well, obviously- Can you go even lower than for a couple of years, or that this is really the bare minimum? We're going to respond to the market conditions in our spend. There's no doubt about that. There will come time that some of the units talk to you, and at some point, you can defer turnarounds, but you might have to either take a squat, and these are things we're looking at. What do I mean by a squat? Instead of doing a 45-day turnaround, you might have a piece of equipment that is saying they need some help. You shut that piece of equipment, fix that down, restart the unit, and then run it a little bit longer. To your question, we've had a low spend, we're continuing to have a low spend. We're continuing to do everything we can to reduce CapEx with some of the best practices we've put in place. This equipment ultimately is going to be need to kept. First and foremost, we have to run a safe, reliable, environmentally responsible operation. We will have to spend to maintain the units in a correct operable condition. We would expect to see some increase in CapEx go forward. Yeah. Tom, I think before the pandemic, at one point, what considered sustaining or maintenance CapEx for you guys is about $600, I think, or to $650. Is that still a reasonable number in a normal market condition? Actually, Herman, what would you say the sustaining CapEx is? Just plain sustaining, probably close to $500 million. You heard that sustaining is about $500 million. Then, of course, we might be spending some money on return projects and things of that nature. That's going to be a function of what the market is. Talking about that, I know you haven't sanctioned the project, the renewable diesel plant that you talked about, any preliminary CapEx that you can share? I'm sorry, Paul. The CapEx that you can share. CapEx in regards to the project? We have not published it or spoken about it just because it's being actively worked. What we can say and what we have said is the project from a capital perspective, and quite honestly from a OpEx perspective, appears to be a top quartile project. When you compare it to the other projects that have been announced, the project looks very, very good. We benefit because we had an idled hydrocracker, quite frankly, that was preserved in a professional manner. That gives us a tremendous leg up. Then on the operating cost side with the project, we directly benefit, or we would directly benefit from the fact that you have synergies with the refinery. All the ancillary sort of services you would need to do if you are a standalone business, get the benefit of reduced OpEx being connected to the Chalmette Refinery. Two final questions from me for Erik, don't know if you can give us some idea, sense that how's the current debt market? What's the opportunity if you need to raise additional debt in the near term? Is it doable? Secondly, I think in the first quarter, you were hoping by now that you will be maybe turning the page and will become positive free cash flow. Just curious that, how's that look, and whether you guys, from a cash flow standpoint in July, whether you break even in the cash flow. Thank you. In reverse order, I think we're a bit disappointed with the second quarter because we didn't get to the level in the June timeframe that we were really shooting for. Unfortunately, the market didn't deliver the economics that we wanted, and the continued pressure from RINs did not allow us to generate enough free cash flow from operations to cover essentially our CapEx and interest. However, it is important to note, we have seen a relatively steady recovery overall since the first quarter. If we go back over the course of the past 12 months, the refining industry, obviously, everybody's lost a lot of money. The first step for us was getting to positive operating contribution or operating margin. We feel very confident we've gotten there, and that now the next step will be what is the incremental operating margin that we ultimately need to generate. If we think about overall costs, we've got roughly $25 million a month in terms of interest. If we think about a circa $300 million a year interest burden. For our guidance that we've provided for the second half of the year, we're going to have $45 million-$50 million a month in overall CapEx. The actual cash itself is relatively lumpy simply because we do have fixed income payments that come not every month. The CapEx is also not ratable. If we think about that over kind of the next six months, I think, again, what Tom pointed out on the front end from a macro standpoint is what we're seeing today. One of the things that needs to be settled near term is what is the near-term 2021 RVO so we can put this RIN issue behind the entire industry and move forward. That's going to be a critical point in understanding exactly where this market's going to go. The macro is the macro for us. I think we continue to operate in the bounds of where we feel comfortable. Our CapEx numbers are increased for the second half of this year. That is in anticipation of continued economic recovery coming out of the pandemic. I think on your debt question, to be completely honest with you, we have zero plans to go into any type of debt market and have not spent a lot of time talking to investment bankers or investors around, if we had to raise debt, what would the price be? I think we pay attention, as we've said before, to where our fixed income securities trade. Today, we have more than ample liquidity. It's going to fluctuate as commodity prices fluctuate. Overall, our key focus internally is maintaining safe, reliable operations to be able to get to the point where we're covering all of our fixed costs across the board. Clearly, the cash expectations that we laid out, we have exceeded those through the end of June. A lot of that, however, is driven by working capital, and I think we've tried to be very transparent in terms of how that working capital is ultimately going to flow through the second half of this year, so that we remain in compliance with our AB 32 and RIN programs for calendar years 2020. Thank you. Our next question comes from the line of Neil Mehta with Goldman Sachs. You may proceed with your question. Yeah. Thanks so much, Erik. I just want to build on that. Obviously, the credit markets are what the credit markets are, but the unsecured has been under a lot of pressure, and as if to say that there are liquidity issues at the business. One of the things that was, I think, incremental in today's release is that you're up to $2.6 billion of liquidity. Can you just put a bow on a lot of the comments that you made over the last 50 minutes of why you feel comfortable about the liquidity position that the company is in and summarize that for us as we look out over the next year? I think the key piece being we know what our dedicated uses of cash are from a working capital standpoint through the remainder of the year. We've provided some CapEx guidance for everyone. We know what our interest burden is. Ultimately, we believe that this industry is going to continue to recover and margins will be there for us to be profitable. If they're not, then ultimately there are other steps that the industry overall is going to have to take. Again, just taking a very high-level view, it is hard to imagine that the refining industry over the course of multiple years will consistently lose money. That has never been the case historically, and every time there has been a recession, there has been a recovery coming out of it. The pandemic was a recession on steroids, and so ultimately, a lot of things will need to be addressed over the next 12 months. Directionally, what we are seeing in terms of macro recovery, everything is trending in the right direction. Thanks, Erik. The follow-up here, this one might be for Tom, but it just strikes us that the industry in the second quarter was running at an elevated utilization, and demand has come back very nicely ex jet, but margins until recently have not followed. Do you think that industry discipline in the refining space is still intact? Ultimately, will the industry let demand run a little ahead of utilization as we go into the shoulder to enable the margins to perform a little better? Yeah, I think certainly that's the key, right? The industry did a spectacular job during the pandemic in actually rationalizing capacity, and not letting the inventory situation degrade even further because of the destruction in demand. I think there was a feeling that when we got down to very low case rates and hospitalization rates and mortality rates, that perhaps this is indeed an end. We were opening up the country. Okay, this is it. We've got nothing on the freeway, and let's see what happens. I think two things. One is, in fact, variants. You got to watch the variants. Obviously, we're going through a spike in cases now. Hopefully, the fact that a high percentage of the population has been vaccinated won't result in a huge amount of a step change in hospitalizations, et cetera. We have to watch it very closely, and I think the industry will watch it very closely. In fact, until we get jet demand completely or get close to full recovery, there's a governor on this. As I said, you cannot run higher than we're running. I think the 91% is about it from a jet limitation, and we'll just watch the inventories. If the inventories start building, I've said 1,000 times over the last many years, running to put product in the tank and hold it is a fool's errand. We would have to cut back and reduce our production to make sure that we don't let the inventories get away from us, which, of course, that would result in obviously a decrease in the cracks. Thanks, Tom. Our next question comes from the line of Paul Sankey with Sankey Research. You may proceed with your question. Good morning, everyone. Hi, Paul. A very specific question, Tom, while I've got you, is there's been some reports that there's shortages of jet fuel around the country. I didn't really understand it given where jet fuel inventory is. I wondered if you had a perspective on that. A follow-up would be on the way crude inventory is acting. It's just interesting that Cushing is coming down the way it is, and I was wondering, as regards to the very low Saudi imports, whether that was purely a function of price differentials or whether there's actually a limitation on availability of Saudi crude, and any other comments on heavy light differentials is always interesting from you guys. Thanks. Okay. I'm going to take the first part and maybe a little bit of the second part. I think we have Tom O'Connor, our head of commercial, who's on the phone. I'll ask him to weigh in and give some thoughts on the crude situation. It's interesting that what's going on recently in jet, as everybody's aware, a lot of things have happened that have caught industries by surprise in the supply chain. Even the airline industry, it appears as though demand, the number of people that are wanting to fly, is being restrained by the fact that the airlines don't have enough people to put them in the air. They've got to get more pilots back. They've been kind of held up on that. Similarly, reports on the jet shortages, regional jet shortages, are in some ways supposedly due to a lack of drivers that are getting jet fuel from wherever they're lifting it on the rack and getting it to the airport. There's a supply constraint, and the government came out this morning and said they were going to intercede and try to see what can be done to help that. That's being done at the same time recently, we've had these fires on the West Coast and parts of the country, and there's been a rather significant increase in cargo planes that have been flying around trying to deal with that issue. You've had an increase in the demand associated with that event. At the same time, it appears as though there's a supply chain restriction that is impacting the ability to get the jet fuel from, say, a refinery to a terminal, but ultimately to an airport. I think that's what's going on. On the diff side and the crude situation, I've made my comments. Tom, are you on the line? Yes, I am. Paul, in regards to that, throughout the second quarter, and as we looked at forward balances, basically, the Cushing market ultimately had to get to a price where it was basically incentivizing crude to stay domestically. We've continued to see that in terms of, you've got the narrow differentials ticking down in terms of where the Houston market is, because effectively, the market got so strong domestically that it basically shut the arbs to move to different areas, and effectively now we're starting to see that softening. While term structure is still quite strong, it is starting to weaken and is balancing in terms of the arbs are starting to soften a touch. In fact, the market's gotten potentially close to where we were talking, or the industry would be talking about tank bottoms. It appears that initial concerns may be alleviated as we basically have approached peak runs, we'll be heading into the seasonal decline in terms of also increased turnaround activity in the fourth quarter. In terms of overall crude avails, we are starting to certainly see more barrels available, sort of, I'd say, across the fleet between different areas, particularly in the fuel oil market, which has moved from very stubborn single-digit differentials in the first half of the year to starting to expand a little bit. Based on everything you've just said, I assume that Saudi/Middle Eastern oil is basically priced out of the market. That continues to be the themes. I think what we'll start to see, also dating back on that, is that we've had, obviously, a lot of issues to sort out through the month of July, in particular as the UAE issues regarding around their baselines have been sorted. I think we'll get better clarity of that as we start to move forward and start to see where the OSPs and volumetrics start to proceed. Brilliant. Thanks. If I could, sorry, but ask a follow-up, maybe for Mr. Lucey. Can you highlight any catalyst moments going forward or timeframe going forward for when we sort out this stupid RIN thing? Is there something that you're looking for, some next series of data points, perhaps? Are we just going to continue drifting in a vague, leave it to Washington kind of mode? Thanks. I'll leave it there. I actually think we're in a window, Paul. There was some paralysis because of the Supreme Court. That's now passed us by, obviously, Holly prevailed on that. As I said before, that sort of becomes a moot point unto itself because it still leaves SREs at the discretion of the administration. You have a window now where, first of all, they're required to put out an RVO, Secretary Regan has been around the country talking about they feel the need to be transparent and, unlike the previous administration, put out an RVO on a timely basis. They haven't lived up to that promise yet, statutorily, they're required to do that. I expect we always dance around with paralysis with the politicians. I will tell you, we've had excellent partnership with the representative workforce that we work with every day, and they are speaking as loudly as they can to the administration because they understand the threat to their livelihoods and what it means to them. Next year, you get into election year, and you can create a whole new list of reasons why things get frozen. I actually think we have a window, and as I said in my comments, I'm hopeful that in the near future, we're going to have more clarity. In the worst-case scenario, if it all plays out as I described, I was sitting with the governor of a reasonably sized state in the not too distant past. I sort of laid this out to him. He said, "Well, they're not going to let that happen, are they?" I said, "I presume you're right." The EPA and the administration can move as quickly or as fast as anyone in the world. I expect that we're going to have a window here in the not too distant future where there'll be more clarity. Okay. Thanks a lot. Your final question comes from the line of Matt Blair with Tudor, Pickering, Holt. You may proceed with your question. Hey, good morning, everyone. You mentioned you're in advanced discussions with partners on the RD project. Would any of these partners provide you with access to advantage feeds, or should we think about this as more like a financial partner? Entering this process, I probably have said this in the past, we've been focused on partners where we think that they're going to be additive to the project. That can come in multiple ways. Obviously, money is a commodity that's fungible. We've been much more focused on partnering with someone that can improve the dynamic of the project and make it even more compelling than it already is. That's where our focus is. I'm not going to get in on specifically what types of partners, but we've been pleased with our discussions in that regard, and we continue to progress it every day. This might be a tough question to answer now, but any early thoughts on the end geographical markets for the Chalmette RD project? Do you expect to place volumes into California, or do you see it as more like a New York, Canada, Europe end market for you? We are merchant refiners, and as such, one of the things you learn in refining, you want as many options as you possibly can because the reality is we don't know where the bell is going to ring and when it's going to ring. You want to have complete optionality. That goes for feeds, but also access to product markets. It's one of the reasons that we think Chalmette is uniquely positioned from a location standpoint, not only for sourcing feeds, but optionality to go to California, to go to Western Canada, or go to Europe, or quite frankly, anywhere else where it becomes the most attractive product market for that renewable diesel product. We think Chalmette, having access to water, rail, and truck, gives us the greatest amount of flexibility, and we'll be able to deliver very competitively into whatever market presents the highest netback. Great. Thank you. We have reached the end of today's question-and-answer session. I would like to turn this call back over to Mr. Tom Nimbley for closing remarks. Well, thank you very much for attending the call today. We look forward to meeting with you at the end of the third quarter and hopefully demonstrate that we have, in fact, seen the inflection point and turned a corner and have gotten to positive cash flow. Have a great day. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation. Enjoy the rest of your day.