pbf-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)


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

For the quarterly period ended: March 31, 2022


☐			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: 001-36446

PBF LOGISTICS LP

(Exact name of registrant as specified in its charter)


Delaware		35-2470286
(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)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Units Representing Limited Partner Interests	PBFX	New York Stock Exchange

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. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☑ 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

Smaller reporting company

Emerging growth company

☐

☑

☐

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. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of April 22, 2022, there were 62,597,855 common units outstanding.

PBF LOGISTICS LP

TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION			6

Item 1. Financial Statements (Unaudited)			6
Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021			6
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2022 and 2021			7
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021			8
Notes to Condensed Consolidated Financial Statements			10

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			24

Item 3. Quantitative and Qualitative Disclosures About Market Risk			40

Item 4. Controls and Procedures			41

PART II - OTHER INFORMATION			42

Item 1. Legal Proceedings			42

Item 1A. Risk Factors			42

Item 6. Exhibits			43

Signatures			44

EXPLANATORY NOTE

PBF Logistics LP (“PBFX” or the “Partnership”) is a Delaware master limited partnership (“MLP”) formed in February 2013. PBF Logistics GP LLC (“PBF GP” or “our general partner”) serves as the general partner of PBFX. PBF GP is wholly-owned by PBF Energy Company LLC (“PBF LLC”). PBF Energy Inc. (“PBF Energy”) is the sole managing member of PBF LLC and, as of March 31, 2022, owned 99.2% of the total economic interest in PBF LLC. In addition, PBF LLC is the sole managing member of PBF Holding Company LLC (“PBF Holding”), a Delaware limited liability company and affiliate of PBFX. PBF LLC owned 29,953,631 PBFX common units constituting an aggregate of 47.9% limited partner interest in PBFX, with the remaining 52.1% limited partner interest owned by public unitholders as of March 31, 2022.

Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 (this “Form 10-Q”) to “Predecessor,” and “we,” “our,” “us,” or like terms, when used in the context of periods prior to the completion of certain acquisitions from PBF LLC, refer to PBF MLP Predecessor, our predecessor for accounting purposes (our “Predecessor”), which includes assets, liabilities and results of operations of certain crude oil, refined products, natural gas and intermediates transportation, terminaling, storage and processing assets previously operated and owned by PBF Holding’s subsidiaries and PBF Holding’s previously held subsidiaries. As of March 31, 2022, PBF Holding, together with its subsidiaries, owns and operates six oil refineries (two of which are operated as a single unit) and related facilities in North America. PBF Energy, through its ownership of PBF LLC, controls all of the business and affairs of PBFX and PBF Holding.

References in this Form 10-Q to “PBF Logistics LP,” “PBFX,” the “Partnership,” “we,” “our,” or “us,” or like terms used in the context of periods on or after the completion of certain acquisitions from PBF LLC, refer to PBF Logistics LP and its subsidiaries.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-Q (including information incorporated by reference) contains certain “forward-looking statements,” as defined in the Private Securities Litigation Reform Act of 1995, which 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; 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 on 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 “Item 1A. Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” elsewhere in this Form 10-Q, in our Annual Report on Form 10-K for the year ended December 31, 2021 (our “2021 Form 10-K”) and in our other filings with the U.S. Securities and Exchange Commission (“SEC”). All forward-looking information in this 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:

•changes in general economic conditions, including market and macro-economic disruptions resulting from pandemics, such as the ongoing coronavirus disease 2019, commonly known as COVID-19, pandemic, including resurgences and variants of the virus, and related governmental and consumer responses thereto;

•our ability to make, complete and integrate acquisitions from affiliates or third parties, and to realize the benefits from such acquisitions;

•our ability to have sufficient cash from operations to enable us to pay the minimum quarterly distribution;

•competitive conditions in our industry;

•political pressure and influence of environmental groups and other stakeholders on decisions and policies related to the refining, processing and storing of crude oil and refined petroleum products;

•actions taken by our customers and competitors;

•the supply of, and demand for, crude oil, refined products, natural gas and logistics services;

•our ability to successfully implement our business plan;

•our dependence on PBF Energy for a substantial majority of our revenue subjects us to the business risks of PBF Energy, which include the possibility that contracts will not be renewed because they are no longer beneficial for PBF Energy;

•a substantial majority of our revenue is generated at PBF Energy’s facilities, particularly associated with PBF Energy’s Delaware City, Toledo and Torrance refineries, and any adverse developments at any of these facilities could have a material adverse effect on us;

•our ability to complete internal growth projects on time and on budget;

•the price and availability of debt and equity financing;

•operating hazards and other risks incidental to the processing of crude oil and the receiving, handling, storing and transferring of crude oil, refined products, natural gas and intermediates;

•natural disasters, weather-related delays, casualty losses and other matters beyond our control;

•the threat of cyber-attacks;

•our and PBF Energy’s increased dependence on technology;

•interest rates;

•labor relations;

•changes in the availability and cost of capital;

•the effects of existing and future laws and governmental regulations, including those related to the shipment of crude oil by rail or in response to the potential impacts of climate change;

•changes in insurance markets impacting costs and the level and types of coverage available;

•the timing and extent of changes in commodity prices and demand for PBF Energy’s refined products and natural gas and the differential in the prices of various crude oils;

•the suspension, reduction or termination of PBF Energy’s obligations under our commercial agreements;

•disruptions due to equipment interruption or failure at our facilities, PBF Energy’s facilities or third-party facilities on which our business is dependent;

•our general partner and its affiliates, including PBF Energy, have conflicts of interest with us and limited duties to us and our unitholders, and they may favor their own interests to the detriment of us and our other common unitholders;

•our partnership agreement restricts the remedies available to holders of our common units for actions taken by our general partner that might otherwise constitute breaches of fiduciary duty;

•holders of our common units have limited voting rights and are not entitled to elect our general partner or its directors;

•our tax treatment depends on qualifying income requirements and our status as a partnership for U.S. federal income tax purposes, as well as not being subject to a material amount of entity level taxation by individual states;

•changes at any time (including on a retroactive basis) in the tax treatment of publicly traded partnerships, including related impacts on potential dropdown transactions with PBF LLC, or an investment in our common units;

•our unitholders will be required to pay taxes on their share of our taxable income even if they do not receive any cash distributions from us;

•the effects of future litigation; and

•other factors discussed elsewhere in this Form 10-Q.

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 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 Form 10-Q. Except as required by applicable law, including the securities laws of the U.S., we undertake no obligation 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.

PART 1 - FINANCIAL INFORMATION

Item 1. Financial Statements

PBF LOGISTICS LP

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except unit data)


	March 31, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	53,329	$	33,904

Accounts receivable - affiliates	51,872		61,724
Accounts receivable	5,041		5,549
Prepaids and other current assets	3,319		3,476
Total current assets	113,561		104,653
Property, plant and equipment, net	779,422		787,338
Goodwill	6,332		6,332
Other non-current assets	3,635		2,974
Total assets	$	902,950	$	901,297

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable - affiliates	$	4,399	$	4,096
Accounts payable	7,061		5,394
Accrued liabilities	21,666		16,812


Deferred revenue	2,724		2,372
Total current liabilities	35,850		28,674
Long-term debt	597,962		622,544
Other long-term liabilities	2,448		1,383
Total liabilities	636,260		652,601

Commitments and contingencies (Note 9)

Equity:

Common unitholders (62,597,855 and 62,574,644 units issued and outstanding, as of March 31, 2022 and December 31, 2021, respectively)	266,690		248,696




Total equity	266,690		248,696
Total liabilities and equity	$	902,950	$	901,297

See Notes to Condensed Consolidated Financial Statements.

PBF LOGISTICS LP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except unit and per unit data)


	Three Months Ended March 31,
	2022		2021
Revenue:
Affiliate	$	75,985	$	75,933
Third-party	13,458		11,572
Total revenue	89,443		87,505

Costs and expenses:
Operating and maintenance expenses	29,415		25,048
General and administrative expenses	3,911		4,464
Depreciation and amortization	9,484		9,405

Change in contingent consideration	238		655
Total costs and expenses	43,048		39,572

Income from operations	46,395		47,933

Other expense:
Interest expense, net	(9,713)		(10,287)
Amortization of loan fees and debt premium	(418)		(429)
Accretion on discounted liabilities	(5)		(6)






Net income attributable to PBF Logistics LP unitholders	$	36,259	$	37,211

Net income per limited partner unit:
Common units - basic	$	0.58	$	0.59
Common units - diluted	0.58		0.59


Weighted-average limited partner units outstanding:
Common units - basic	62,896,848		62,646,664
Common units - diluted	63,020,348		62,780,594

See Notes to Condensed Consolidated Financial Statements.

PBF LOGISTICS LP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)


	Three Months Ended March 31,
	2022		2021
Cash flows from operating activities:
Net income	$	36,259	$	37,211
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	9,484		9,405

Amortization of loan fees and debt premium	418		429
Accretion on discounted liabilities	5		6
Unit-based compensation expense	654		989
Change in contingent consideration	238		655
Changes in operating assets and liabilities:
Accounts receivable - affiliates	9,852		(5,755)
Accounts receivable	508		7,415
Prepaids and other current assets	157		735

Accounts payable - affiliates	303		701
Accounts payable	1,536		1,423
Accrued liabilities	7,286		1,357
Deferred revenue	352		337
Other assets and liabilities	270		(86)
Net cash provided by operating activities	67,322		54,822

Cash flows from investing activities:


Expenditures for property, plant and equipment	(1,433)		(1,254)


Net cash used in investing activities	$	(1,433)	$	(1,254)

See Notes to Condensed Consolidated Financial Statements.

PBF LOGISTICS LP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(unaudited, in thousands)


	Three Months Ended March 31,
	2022		2021



























Cash flows from financing activities:




Distributions to unitholders	$	(18,779)	$	(18,710)








Repayment of revolving credit facility	(25,000)		(15,000)

Payment of contingent consideration	(2,685)		(12,176)

Net cash used in financing activities	(46,464)		(45,886)

Net change in cash and cash equivalents	19,425		7,682
Cash and cash equivalents, beginning of period	33,904		36,284
Cash and cash equivalents, end of period	$	53,329	$	43,966

Supplemental disclosure of non-cash investing and financing activities:
Accrued and unpaid capital expenditures	$	843	$	3,147

See Notes to Condensed Consolidated Financial Statements.

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)

1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION

PBF Logistics LP (“PBFX” or the “Partnership”) is a Delaware master limited partnership formed in February 2013. PBF Logistics GP LLC (“PBF GP” or “our general partner”) serves as the general partner of PBFX. PBF GP is wholly-owned by PBF Energy Company LLC (“PBF LLC”). PBF Energy Inc. (“PBF Energy”) is the sole managing member of PBF LLC and, as of March 31, 2022, owned 99.2% of the total economic interest in PBF LLC. In addition, PBF LLC is the sole managing member of PBF Holding Company LLC (“PBF Holding”), a Delaware limited liability company and affiliate of PBFX. PBF LLC owned 29,953,631 PBFX common units constituting an aggregate of 47.9% limited partner interest in PBFX, with the remaining 52.1% limited partner interest owned by public unitholders as of March 31, 2022.

PBFX engages in the processing of crude oil and the receiving, handling, storing and transferring of crude oil, refined products, natural gas and intermediates. The Partnership generally does not take ownership of or receive any payments based on the value of the crude oil, products, natural gas or intermediates that it handles and does not engage in the trading of any commodities. PBFX’s assets are integral to the operations of PBF Holding’s refineries, and, as a result, the Partnership continues to generate a substantial majority of its revenue from transactions with PBF Holding. Additionally, certain of PBFX’s assets generate revenue from third-party transactions.

Principles of Combination and Consolidation and Basis of Presentation

In connection with, and subsequent to, PBFX’s initial public offering (“IPO”), the Partnership has acquired certain assets from PBF LLC (collectively referred to as the “Contributed Assets”). Such acquisitions completed subsequent to the IPO were made through a series of dropdown transactions with PBF LLC (collectively referred to as the “Acquisitions from PBF”). The assets, liabilities and results of operations of the Contributed Assets prior to their acquisition by PBFX are collectively referred to as the “Predecessor.” The transactions through which PBFX acquired the Contributed Assets were transfers of assets between entities under common control. The accompanying condensed consolidated financial statements and related notes present solely the consolidated financial position and consolidated financial results of PBFX. Refer to the Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”) for additional information regarding the Acquisitions from PBF and the agreements that were entered into or amended with related parties in connection with these acquisitions.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, these unaudited condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, PBFX has included all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position, results of operations and cash flows of PBFX for the periods presented. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the full year.

The Predecessor generally did not operate its respective assets for the purpose of generating revenue independent of other PBF Energy businesses prior to the IPO or the effective dates of the Acquisitions from PBF. All intercompany accounts and transactions have been eliminated.

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)

Recently Adopted Accounting Guidance

In March 2020, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”. The amendments in this ASU provide optional guidance to alleviate the burden in accounting for reference rate reform by allowing certain expedients and exceptions in applying GAAP to contracts, hedging relationships and other transactions affected by the expected market transition from London Interbank Offering Rate and other interbank rates. The Partnership’s adoption of this guidance did not have, and is not anticipated to have, a material impact on its condensed consolidated financial statements and related disclosures.

2. REVENUE

Revenue Recognition

In accordance with FASB Accounting Standards Codification “Revenue from Contracts with Customers (Topic 606),” revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration to which the Partnership expects to be entitled in exchange for those goods or services.

As disclosed in Note 11 “Segment Information” of the Notes to Condensed Consolidated Financial Statements, the Partnership’s business consists of two reportable segments: (i) Transportation and Terminaling and (ii) Storage.

The following table provides information relating to the Partnership’s revenue for each service category by segment for the periods presented:


	Three Months Ended March 31,
	2022		2021
Transportation and Terminaling Segment
Terminaling	$	35,398	$	38,835
Pipeline	22,302		20,574
Other	12,548		12,068
Total	70,248		71,477
Storage Segment
Storage	15,197		13,748
Other	3,998		2,280
Total	19,195		16,028
Total Revenue	$	89,443	$	87,505

PBFX recognizes revenue by charging fees for crude oil and refined products terminaling, pipeline, storage and processing services based on contractual rates applied to the greater of contractual minimum volume commitments (“MVCs”), as applicable, or actual volumes transferred, stored or processed.

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)

Minimum Volume Commitments

Transportation and Terminaling Segment

The Partnership’s Transportation and Terminaling segment consists of product terminals, pipelines, crude unloading facilities and other facilities capable of transporting and handling crude oil, refined products and natural gas. Certain of the affiliate and third-party Transportation and Terminaling commercial agreements contain MVCs. Under these commercial agreements, if the Partnership’s customer fails to transport its minimum throughput volumes during any specified period, the customer will pay the Partnership an amount equal to the difference in actual volumes transported and/or throughput and the minimum volumes required under the agreement multiplied by the applicable contractual rate (each a “deficiency payment”). Deficiency payments are initially recorded as deferred revenue on the Partnership’s balance sheets for all contracts in which the MVC deficiency makeup period is contractually longer than a fiscal quarter.

Certain of the Partnership’s customers may apply deficiency payment amounts as a credit against volumes throughput in excess of its MVC, as applicable, during subsequent quarters under the terms of the applicable agreement. The Partnership recognizes operating revenue for the deficiency payments when credits are used for volumes transported in excess of MVCs or at the end of the contractual period. Unused credits determined to have a remote chance of being utilized by customers in the future are recognized as operating revenue in the period when that determination is made. The use or recognition of the credits is recorded as a reduction to deferred revenue.

Storage Segment

The Partnership earns storage revenue under crude oil and refined products storage contracts. In addition, the Partnership earns storage revenue under its processing agreement at its East Coast storage facility. Certain of these affiliate and third-party contracts contain capacity reservation agreements, under which the Partnership collects a fee for reserving storage capacity for customers in its facilities. Customers generally pay reservation fees based on the level of storage capacity reserved rather than the actual volumes stored.

MVC Payments to be Received

As of March 31, 2022, MVC payments to be received, based on future performance obligations of the Partnership, related to noncancellable commercial terminaling, pipeline and storage agreements were as follows:


Remainder of 2022	$	76,620
2023	94,499
2024	92,505
2025	92,252
2026	—
Thereafter	—
Total MVC payments to be received (1)(2)	$	355,876

(1) All fixed consideration from contracts with customers is included in the amounts presented above. Variable consideration that is constrained or not required to be estimated is excluded.

(2) Arrangements deemed leases are excluded from this table.

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)

Leases

Lessor Disclosures

The Partnership has leased certain of its assets under lease agreements with varying terms up to fifteen years, including leases of storage, terminaling, pipeline and processing assets. Certain of these leases include options to extend or renew the lease for one or more years. These options are included in the lease term when it is reasonably certain that the option will be exercised. The Partnership’s lease agreements generally do not provide an option for the lessee to purchase the leased equipment at the end of the lease term. However, in connection with the affiliate lease agreement for the interstate natural gas pipeline at PBF Holding’s Paulsboro Refinery (the “Paulsboro Natural Gas Pipeline”), the Partnership granted a right of first refusal in favor of PBF LLC such that the Partnership would be required to give PBF Holding the first opportunity to purchase the Paulsboro Natural Gas Pipeline at market value prior to selling to an unrelated third party.

At inception, the Partnership determines if an arrangement contains a lease and whether that lease meets the classification criteria of a finance or operating lease. As of March 31, 2022, all of the Partnership’s leases have been determined to be operating leases. Some of the Partnership’s lease arrangements contain lease components (e.g., MVCs) and non-lease components (e.g., maintenance, labor charges, etc.). The Partnership accounts for the lease and non-lease components as a single lease component for every asset class.

Certain of the Partnership’s lease agreements include MVCs that are adjusted periodically based on a specified index or rate. The leases are initially measured using the projected payments adjusted for the index or rate in effect at the commencement date. The Partnership’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Partnership expects to derive significant future benefits from its leased assets following the end of the lease term, as the remaining useful life would be sufficient to allow the Partnership to enter into new leases for such assets.

In the normal course of business, the Partnership enters into contracts with PBF Holding and its refineries whereby PBF Holding and its refineries lease certain of the Partnership’s storage, terminaling and pipeline assets. The Partnership believes the terms and conditions under these leases are generally no less favorable to either party than those that could have been negotiated with unaffiliated parties with respect to similar services. The terms for these affiliate leases range from one to fifteen years. Leases with affiliates represent approximately 90% of the undiscounted contractual future rental income from the Partnership’s leased assets.

The table below quantifies lease revenue for the three months ended March 31, 2022 and 2021:


	Three Months Ended March 31,
	2022		2021
Affiliate	$	41,461	$	36,848
Third-party	8,096		7,050
Total lease revenue	$	49,557	$	43,898

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)

Undiscounted Cash Flows

The table below presents the fixed component of the undiscounted cash flows to be received for each of the periods presented for the Partnership’s operating leases with customers as of March 31, 2022:


Remainder of 2022	$	109,661
2023	138,030
2024	136,498
2025	109,816
2026	79,395
Thereafter	54,572
Total undiscounted cash flows to be received	$	627,972

Assets Under Lease

The Partnership’s assets that are subject to lease are included in “Property, plant and equipment, net” within the Partnership’s condensed consolidated balance sheets. The table below quantifies, by category within property, plant and equipment, the assets that are subject to lease as of March 31, 2022 and December 31, 2021:


	March 31, 2022		December 31, 2021
Land	$	98,337	$	98,337
Pipelines	322,479		322,437
Terminals and equipment	83,490		83,411
Storage facilities and processing units	183,493		183,493
	687,799		687,678
Accumulated depreciation	(140,107)		(133,962)
Net assets subject to lease	$	547,692	$	553,716

Deferred Revenue

The Partnership records deferred revenue when cash payments are received or due in advance of performance, including amounts which are refundable. Deferred revenue was $2,724 and $2,372 as of March 31, 2022 and December 31, 2021, respectively. Changes in deferred revenue are primarily driven by the timing and extent of cash payments received in advance of satisfying the Partnership’s performance obligations for the comparative periods.

The Partnership’s payment terms vary by the type and location of the customer and the services offered. The period between invoicing and when payment is due is not significant (i.e., generally within two months). For certain services and customer types, the Partnership requires payment before the services are performed for the customer.

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)

3. CURRENT EXPECTED CREDIT LOSSES

Credit Losses

The Partnership has exposure to credit losses through its collection of fees charged to customers for terminaling, pipeline, storage and processing services. The Partnership evaluates creditworthiness on an individual customer basis. The Partnership utilizes a financial review model for purposes of evaluating creditworthiness, which is based on information from financial statements and credit reports. The financial review model enables the Partnership to assess the customer’s risk profile and determine credit limits on the basis of their financial strength, including but not limited to, their liquidity, leverage, debt serviceability, longevity and how they pay their bills. The Partnership may require security in the form of letters of credit or cash payments in advance of product and services delivery for certain customers that are deemed higher risk. Additionally, the Partnership may hold customers’ product in storage at its facilities as collateral and/or deny access to its facilities, as allowable under commercial law or its contractual agreements, should payment not be received.

The Partnership reviews each customer’s credit risk profile at least annually, or more frequently if warranted. Based on its credit assessments, the Partnership may adjust payment terms or limit available trade credit for customers, and customers within certain industries, which are deemed to be at a higher risk.

The Partnership performs a quarterly allowance for doubtful accounts analysis to assess whether an allowance needs to be recorded for any outstanding trade receivables. In estimating credit losses, management reviews accounts that are past due, have known disputes or have experienced any negative credit events that may result in future collectability issues. There was no allowance for doubtful accounts recorded as of March 31, 2022 or December 31, 2021.

4. PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net consisted of the following:


	March 31, 2022		December 31, 2021
Land	$	114,844	$	114,844
Pipelines	346,554		346,512
Terminals and equipment	321,525		321,082
Storage facilities and processing units	202,729		202,729
Construction in progress	3,576		2,991
	989,228		988,158
Accumulated depreciation	(209,806)		(200,820)
Property, plant and equipment, net	$	779,422	$	787,338

Depreciation expense was $9,359 and $9,280 for the three months ended March 31, 2022 and 2021, respectively.

PBF LOGISTICS LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)

5. INTANGIBLES

The Partnership’s net intangibles consisted of the following:

March 31,
2022

December 31,
2021

SEC Form 10-Q filed by PBF Logistics LP