Barclays CEO Energy-Power Conference Greg Goff President and CEO September 2013
Tesoro Today Positioned in the western United States Six refineries 845,000 barrels per day capacity Over 2,200 retail stations branded Kenai, AK (72 mbpd) Tesoro, ARCO, Shell and USA Anacortes, WA (120 mbpd) Gasoline Mandan, ND…
Key Messages Delivering key strategic initiatives and driving significant shareholder value Strengthening our West Coast business Advantaged position in the Mid-Continent Driving feedstock advantage to PADD5 refineries Tesoro…
Strategic Priorities Operational efficiency and effectiveness Safety and reliability System improvements Cost leadership Commercial excellence Financial discipline Value-driven growth High-performing culture 5
Operational Efficiency & Effectiveness Large Capital Program Bakken Crude Oil Supply to Anacortes Capital: 60 million Annual EBITDA: 160-180 million Project IRR: 220% Mandan Refinery Expansion Completed in September 2012 Capital:…
High-Return Capital Investments 1,2 1,2 Income Capital Spend Cumulative EBITDA in millions in millions 640-650 290 570-580 510-520 245 200 293 65 2012 2013E 2014E 2015E 2012 2013E 2014E 2015E Shorter-term spending…
Commercial Excellence Tesoro West Coast Crude Cost Advantage State of Washington Crude Oil Source 19% Bakken Differential 40-50% 2010 2011 2012 1H 2013 26% to ANS 0-10% Foreign Canadian (3.35) (12.85) (24.35) (17.95) Light…
Port of Vancouver, WA 50/50 joint venture with Savage Own and operate a unit train unloading and marine loading facility Initial capacity of 120 mbpd, near-term expansion capability to over 280 mbpd Total JV cost of 75 to 100…
Carson Acquisition Increases clean product yields Enhances gasoline to diesel production flexibility Lowers manufacturing costs Reduces stationary source air emissions Expands advantaged feedstock supply opportunities Reduces…
California Regulatory Environment AB32 regulations Lower Stationary source air emissions Gasoline to Distillate Ratio More reductions Competitive Low carbon fuel standard Fuels under the cap Impact of AB32 regulations…
Success of Tesoro Logistics Quarterly Cash Distributions Over 20% CAGR in cash distributions per unit 0.46 0.47 0.49 0.51 0.41 0.36 0.38 Delivery on organic growth plan 0.34 0.35 Four asset purchases from Tesoro since initial…
Chevron Northwest Products System Northwest Products System 760 mile FERC regulated pipeline Five-mile jet fuel pipeline to SLC airport Pasco Refined product terminals in Boise, Pocatello, and Pasco Boise 1.3 million barrels…
TLLP and Carson Logistics Marine and Storage Terminals and Pipelines Two marine terminals; 400 mbpd of crude oil and product throughput VLCC capable dock Over 7 mmbbls feedstock and product storage 114 miles of active pipelines…
Value-Driven Growth Tesoro Benefits From TLLPs Growth TLLP EBITDA Expectations Implied TLLP Enterprise Value1 in millions in billions 260 - 285 4.0 - 4.3 Public Equity and Debt Tesoro Equity (per TSO share) 170 - 175 2.7 -…
Financial Priorities Maintain minimum cash balance of 600 to 750 million Solid Operating Results Target debt to capitalization ratio below 30% Strategic Strong Cash Growth Return Excess Flows Invest in high-return capital…
Capital Spending 1 2 Tesoro Capital Spending TLLP Capital Spending in millions in millions 580 575 565 521 110 105 75 38 2012 2013E 2014E 2015E 2012 2013E 2014E 2015E Regulatory Maintenance Income Carson Income…
Turnaround Spending in millions 400 Legacy Tesoro Carson 275 261 210 140 109 2010 2011 2012 2013E 2014E 2015E 2013 completes peak in turnaround cycle, lower spending going forward 21
Delivering Free Cash Flow Based on consensus estimates and Free Cash Flow 1-4 transaction cash flows: in billions Expected to generate about 3.0 1.1 1.1 billion over three years 0.8 Plan to spend over 400 million in income…
Appendix
Mandan Refinery Expansion Expanded capacity from 58 to 68 mbpd Total cost of 35 million Annual EBITDA contribution 45-55 million* Completed in June 2012 Supports growth of Tesoro Logistics Increases throughput of advantaged…
Bakken Crude Oil Supply to Anacortes Permitted to unload 50 mbpd, 40% of refining capacity Supplements cost-advantaged Canadian crude oil Annual EBITDA contribution - 160-180 million* Delivered in September 2012 Sold to TLLP for…
Wilmington Yield Improvement Vacuum distillation unit replacement Product yield upgrade from petroleum coke to clean products Total cost of 40 million Annual EBITDA contribution 20-25 million* Completed in November 2012 New…
Mandan DDU Expansion Expand diesel desulfurization unit (DDU) capacity from 17 to 22 mbpd Increase diesel fuel yield at Mandan Total cost of 35 million Annual EBITDA contribution 10-12 million* Completed in June 2013 Optimize…
Salt Lake City Conversion Project Improve yields of gasoline and diesel Increase throughput capacity by 4 mbpd 100% increase of advantaged waxy crude oil throughput up to 22 mbpd Total cost of 275 million Annual EBITDA…
Non-GAAP Financial Measures EBITDA represents earnings before interest and financing costs, net, interest income, income taxes, and depreciation and amortization expense. We present EBITDA because we believe some investors and analysts…
Non-GAAP Financial Measures (In millions) Unaudited Projected TLLP Annual EBITDA (2) Current Post Chevron Post Carson IPO Run Rate Acquisition Logistics Projected net earnings 42 101 104 124 Add depreciation and amortization…
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