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#BPOG
A collaboration between:
Matt Flanagan, Partner – Opportune LLP
Richard Loew, CIO – PBF Energy
Making Downstream Refining Mergers & Acquisitions Work
• PBF is a diversified and growing Refining Company – one of the largest independent refiners in the US
• Acquired 5 refineries in 4 PADDs since 2010 – 2 acquisitions in last year
• Successful asset integration due to: – Strong communication – Collaborative IT planning and decision making – Heavy reliance on deeply experienced partners
Main Message
#BPOG | Best Practices for Oil & Gas | 2
TORRANCE
CHALMETTE
TOLEDO
PAULSBORO
DELAWARE CITY
884,000 barrels per day of throughput capacity in four PADDs
• Why SAP? • Integration Options • Implementation Challenges • Implementation Successes • Key Lessons Learned • Questions
What We’ll Cover
#BPOG | Best Practices for Oil & Gas | 3
Introduction & Overview
#BPOG | Best Practices for Oil & Gas | 4
Expected EBITDA Growth
• Rapid Growth Enablers: – Partnered with experienced 3rd parties for:
• Initial crude purchases • Leveraging an intermediation model for
commodities, supply, trading and marketing • Defining the IT strategy and developing the IT
Roadmap
– Established an entrepreneurial culture by: • Being flexible and adaptable • Challenging paradigms and, • Encouraging creativity to overcome aggressive
timelines – Built an IT platform which would be:
• Scalable • Affordable in a volatile refining crack environment
PBF has tripled its size and throughput since its formation in 2008
#BPOG Best Practices for Oil & Gas 2016 | 5
WHY SAP?
Why SAP?
#BPOG | Best Practices for Oil & Gas 2016 | 6
Addresses PBF’s IT Base Principles of:
Proven Record of:
To Become PBF’s Technology Backbone
For:
•Supporting business model •Satisfying functional requirements •Being easily scalable •Meeting Audit and SOX requirements
•Commitment to the Energy Industry •Penetration of the Downstream Refining Sector •Supporting Companies’ scalability •Supporting centralized/decentralized business models •Abundant and diverse support options available
•Consolidations •Treasury •Finance & Accounting •Refining Maintenance and Warehousing •Non-Hydrocarbon Procurement
• IT is not on the Critical Path! • IT Challenges and Goals During Acquisitions are:
– Safe Operations – Refinery Can Distribute Product on Day 1 – Products are billed and,
– Vendors get paid
Key Points to Take Home
#BPOG | Best Practices for Oil & Gas | 7
#BPOG #BPOG | Best Practices for Oil & Gas | 8
INTEGRATION OPTIONS
Integration Options
2008 O’Malley & team form PBF
Dec 2010 Completed acquisition of Paulsboro Refinery
Oct 2011 Delaware City Refinery Operational
Mar 2011 Completed acquisition of Toledo Refinery
Jun 2010 Completed acquisition of Delaware City Refinery
Sep 2012 Completed first two phases of East Coast rail infrastructure
Q1 2013 Completed rail project at Delaware City
Nov 2015 Completed acquisition of Chalmette Refinery
Apr 2014 PBF Logistics launches IPO (PBFx)
Jul 2016 Completed acquisition of Torrance refinery
Apr 2016 PBFx closes acquisition of East Coast Terminals
PBF has tripled its size and throughput capacity since its formation in 2008
2008 2009 2010 2011 2012 2013 2014 2015 2016
Company Formation Acquisitions & Improvements Growth & Optimizations
• Backbone: Benefits Assessed – Single System – Consistent Processes – Financial and Consolidated Reporting – Maintenance Cost
This anticipated aggressive growth led to the evaluation of two key SAP options for the Chalmette and Torrance acquisitions: 1. Integrate the assets on the existing PBF backbone, or 2. Carve out the new assets from the seller’s system and implement/load them on a separate and independent SAP environment
• Carve Out: Factors Considered – Timeline Aggressiveness – Speed of Transition – Change Management Impacts – PBF’s Decentralized Business Model
#BPOG | Best Practices for Oil & Gas | 9
Key Points to Take Home
Best Practices for Oil & Gas 2016 | 10
Field a Separate Team
Engage Right Business Partner
Maintain The Same Team
Change Management Track
Post Go-Live Metrics
Cross-Functional Interactions
More Testing
More Data Validation
More Cross Functional Participation More Business Involvement Throughout
Continue Doing Apply Lessons Learned Change
#BPOG Best Practices for Oil & Gas 2016 | 11
IMPLEMENTATION CHALLENGES
• Aggressive acquisitions timelines • Limited time to confirm system functionality and
validate data pre-CIC • Slower identification of key issues post CIC
Implementation Challenges
#BPOG | Best Practices for Oil & Gas 2016 | 12
PBF’s key challenges centered around: Timing Participation and
• PBF had to train resources to insource business activities previously done offshore by the seller
• Data validation required much involvement across all business functions
• Testing drew upon several key business resources from Finance, Procurement and Maintenance
#BPOG Best Practices for Oil & Gas 2016 | 13
IMPLEMENTATION SUCCESSES
Implementation Successes
#BPOG | Best Practices for Oil & Gas 2016 | 14
Despite challenges encountered during acquisition projects, there are nonetheless key success factors as well:
The System Works! • Load product • Bill customers correctly • Pay vendors
Team Make-Up, Chemistry and Experience • Resource quality and experience are key • Partners proved to be invaluable in helping PBF accomplish its
strategic objectives
Applying Lessons Learned • Open-mindedness about continuously doing better and improving
#BPOG Best Practices for Oil & Gas 2016 | 15
KEY LESSONS LEARNED
Key Lessons Learned
#BPOG | Best Practices for Oil & Gas 2016 | 16
Continuous, Frequent and
Open Communication
are Key
Each Acquisition is
Different
Business Engagement
is Critical
Attend to ALL Business Sites
Continuously Apply Lessons
Learned
Be flexible and Swift to
Potential Changes in
Course
#BPOG
Questions?
SAP-Centric EAM 2015 | 18 #BPOG
Best Practices for Oil & Gas 2016 | 18
Richard Loew, CIO, PBF Energy Email: Richard.Loew@pbfenergy.com
Matt Flanagan, Partner, Opportune LLP Email: mflanagan@opportune.com
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