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Bank Of America Refining Conference – Tesoro Corporation

Tesoro Corporation · Mar 1, 2013 · 31 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Bank Of America Refining Conference – Tesoro Corporation – slide 1
    Bank of America / Merrill Lynch Refining Conference Dan Romasko EVP, Operations March 2013
  2. Bank Of America Refining Conference – Tesoro Corporation – slide 2
    Tesoro Today Positioned in the western United States Seven refineries 675,000 barrels per day capacity Kenai, AK (72 mbpd) Over 1,400 retail stations branded Tesoro, Shell and USA Gasoline Mandan, ND (68 mbpd) Advantaged crude…
  3. Bank Of America Refining Conference – Tesoro Corporation – slide 3
    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…
  4. Bank Of America Refining Conference – Tesoro Corporation – slide 4
    Strategic Priorities Operational efficiency and effectiveness Safety and reliability System improvements Cost leadership Commercial excellence Financial discipline Value-driven growth High-performing culture 5
  5. Bank Of America Refining Conference – Tesoro Corporation – slide 5
    Strong EBITDA Growth Three year EBITDA CAGR of 78% EBITDA in millions Despite 2012 heavy turnaround 2,041 schedule: 1,480 Refinery utilization rate at 87% Gross margin capture essentially flat 551 364 Manufacturing cost…
  6. Bank Of America Refining Conference – Tesoro Corporation – slide 6
    Operational Efficiency & Effectiveness Large Capital Program Bakken Crude Oil Supply to Anacortes Capital: 60 million Annual EBITDA: 160-180 million Mandan Refinery Expansion Project IRR: 220% Completed in September 2012 Capital:…
  7. Bank Of America Refining Conference – Tesoro Corporation – slide 7
    Operational Efficiency & Effectiveness Small Capital Program, 2012 Completed Projects Kenai Anacortes Mandan Hydrocracker modification NHT hydrogen recovery Water system upgrades Capital: 0.5 million Capital: 0.3 million Capital:…
  8. Bank Of America Refining Conference – Tesoro Corporation – slide 8
    High-Return Capital Investments 1,2 1,2 Income Capital Spend Cumulative EBITDA in millions in millions 550-560 570-580 290 510-520 210 165 293 65 2012 2013E 2014E 2015E 2012 2013E 2014E 2015E Shorter-term spending horizon…
  9. Bank Of America Refining Conference – Tesoro Corporation – slide 9
    Commercial Excellence Tesoro West Coast Crude Cost Advantage State of Washington Crude Oil Source 17% Differential 2010 2011 2012 40-50% Bakken to ANS 26% Canadian 0-10% Foreign (3.35) (12.85) (24.35) Light Sweet 57% 30-40%…
  10. Bank Of America Refining Conference – Tesoro Corporation – slide 10
    Commercial Excellence Tesoro Mid-Continent Crude Cost Advantage Canadian Crude Oil Production mbpd 4,500 3,500 2,500 1,500 2011 2012E 2015E 2020E Mandan, ND Refinery Domestic Crude Oil Throughput: 100% Uinta Crude Oil Production…
  11. Bank Of America Refining Conference – Tesoro Corporation – slide 11
    Commercial Excellence Rail Cost from the Bakken1 Bakken TSO Cost Advantaged Feedstocks (percent of total throughput) California 55-60% Pacific Northwest 50-55% Mid-continent 100% Consolidated 65% West Coast logical…
  12. Bank Of America Refining Conference – Tesoro Corporation – slide 12
    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…
  13. Bank Of America Refining Conference – Tesoro Corporation – slide 13
    Carson Synergy Overview Synergy EBITDA Synergy Capital millions millions 250 145 215 - 235 165 - 185 100 - 120 60 35 35 25 - 35 (10) 2013E 2014E 2015E 2016E 2017E 2013E 2014E 2015E 2016E 2017E Synergies Capital…
  14. Bank Of America Refining Conference – Tesoro Corporation – slide 14
    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…
  15. Bank Of America Refining Conference – Tesoro Corporation – slide 15
    Success of Tesoro Logistics Quarterly Cash Distributions 25% CAGR in cash distributions per unit 0.46 0.47 0.41 0.36 0.38 Delivery on organic growth plan 0.34 0.35 Three asset purchases from Tesoro since initial public…
  16. Bank Of America Refining Conference – Tesoro Corporation – slide 16
    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…
  17. Bank Of America Refining Conference – Tesoro Corporation – slide 17
    TLLP and Carson Logistics Marine and Storage Terminals and Pipelines Three 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…
  18. Bank Of America Refining Conference – Tesoro Corporation – slide 18
    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 -…
  19. Bank Of America Refining Conference – Tesoro Corporation – slide 19
    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…
  20. Bank Of America Refining Conference – Tesoro Corporation – slide 20
    Capital Spending 1 Tesoro Capital Spending TLLP Capital Spending in millions in millions 521 455 380 295 Income Maintenance 75 70 65 38 Regulatory 2012 2013E 2014E 2015E 2012 2013E 2014E 2015E Income capital plans…
  21. Bank Of America Refining Conference – Tesoro Corporation – slide 21
    Turnaround Spending in millions 310 261 140 150 109 85 2010 2011 2012 2013E 2014E 2015E 2013 completes peak in turnaround cycle, lower spending going forward Note: Excludes expected Carson turnaround spending. 22
  22. Bank Of America Refining Conference – Tesoro Corporation – slide 22
    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…
  23. Bank Of America Refining Conference – Tesoro Corporation – slide 23
    How the Market Should Value Tesoro Based on forward cash flow, TSO Implied Share Price Value trading near low end of implied per share value TLLP Implied Unit 95 Price plus Does not fully reflect: GP Distribution Multiple…
  24. Bank Of America Refining Conference – Tesoro Corporation – slide 24
    Appendix
  25. Bank Of America Refining Conference – Tesoro Corporation – slide 25
    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…
  26. Bank Of America Refining Conference – Tesoro Corporation – slide 26
    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…
  27. Bank Of America Refining Conference – Tesoro Corporation – slide 27
    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…
  28. Bank Of America Refining Conference – Tesoro Corporation – slide 28
    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* Expected completion 2Q 2013…
  29. Bank Of America Refining Conference – Tesoro Corporation – slide 29
    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 to 21 mbpd Total cost of 180 million Annual EBITDA contribution…
  30. Bank Of America Refining Conference – Tesoro Corporation – slide 30
    Non-GAAP Financial Measure 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 use…
  31. Bank Of America Refining Conference – Tesoro Corporation – slide 31
    Non-GAAP Financial Measure (In millions) Unaudited BP Carson Transaction Synergies 2013E 2014E 2015E 2016E 2017E Projected net earnings 18 67 104 133 149 Add income tax expense 11 41 63 82 91 Add depreciation and amortization…

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