ACQUISITION OF BPS SOUTHERN CALIFORNIA REFINING AND MARKETING BUSINESS August 2012
ACQUISITION HIGHLIGHTS Creates world scale refinery Strengthens our West Coast business Increases distillate yield Tesoro Wilmington Lowers refining and distribution costs Extensive, integrated logistics system Reduces stationary…
TRANSACTION OVERVIEW Acquisition of BPs Southern California refining and marketing business for 1,175 million 266 MBD high complexity refinery in Carson, California Integrated retail marketing network of 800 dealer sites ARCO…
FINANCIAL OVERVIEW Attractive purchase price 1,175 million for refining, marketing, logistics and complementary assets About 1 billion of logistics assets to be sold to Tesoro Logistics LP About 175 million for refining, marketing and…
FINANCIAL OVERVIEW Funded with a combination of cash and debt Cash of 500 to 750 million Inventory financing of 500 to 750 million Interim financing of 1,000 to 1,500 million Interim financing retired through Sale of logistics…
HIGHLY ACCRETIVE millions 2013 2014 Tesoro Base EBITDA (1) 1,655 1,614 BP Assets EBITDA (2) 475 525 Total EBITDA 2,130 2,139 Improvement 29% 33% Tesoro Base Net Income (1) 677 662 BP Assets Net Income (2)(3) 165 160 Total Net…
ATTRACTIVE PURCHASE PRICE millions Purchase price 2,475 Less: Working capital (1,300) Less: Sale of logistic assets to TLLP (1,000) Less: Retail marketing (125) Net refining asset price(1) 50 Carson refinery capacity, MBD…
INDICATIVE PURCHASE PRICE COMPARISON TSO Carson 14 HFC Tulsa (6/09) 28 PBF Del City (4/10) 102 HFC Tulsa (10/09) 106 PBF Paulsboro (9/10) 138 VLO Meraux (9/11) 171 PBF Toledo (12/10) 205 NTI St. Paul Park (10/10)…
TESOROS STRATEGIC PRIORITIES Operational Efficiency and Effectiveness Combined refineries creates world scale facility Increases clean product yields Enhances gasoline to diesel production flexibility Lowers manufacturing costs…
TESOROS STRATEGIC PRIORITIES Financial Discipline Financing strategy preserves balance sheet strength Value of logistics assets reduces cost of capital and effective purchase price Total debt to total capitalization expected below…
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 improvements Feedstock…
FEEDSTOCK OPTIMIZATION SYNERGIES Freight economics to West Coast system VLCC capability Reduced cost of supply Alaskan Canadian Additional crude oil source opportunities Russian Shale Lightering benefits shared with system…
PRODUCT SYNERGIES Lower distribution costs Optimize retail distribution Jet fuel to Los Angeles International Airport Enhanced logistics utilization Reduce reliance on thirdparty terminals Opportunity to open proprietary…
OPERATING PROCESS SYNERGIES Increase clean product yield, primarily distillates Reduce stationary source air emissions (1) CO2 emissions by 30% NOx by 20% SOx by 10% Lower manufacturing costs Lower turnaround costs Combined…
WEST COAST REFINERIES 20 18 Tesoro Wilmington 16 Combined Refinery 14 Nelson Complexity BP Carson Refinery 12 10 8 6 4 2 0 0 50 100 150 200 250 300 350 400 MBD Throughput Capacity, mbpd Combined refinery one of…
CARSON REFINERY Feedstocks 2011 Other 266 MBD refinery adjacent to Tesoros Other Feedstocks, Crudes, 7% 13% Wilmington, CA refinery Nelson complexity of 13.3 Middle ANS, 47% Eastern, 33% 650 acres of land Top quartile…
MARKETING Approximately 800 dealer retail stations in Southern California, Nevada and Arizona High volume stations, average over 245,000 gallons per month per site Gasoline sales volumes balanced with refinery gasoline…
COMPLEMENTARY ASSETS Watson Cogeneration Facility Operator of 400 megawatt gas fired cogen 51% ownership interest Largest cogen in California Reliable electricity source for Carson Refinery Sells excess electricity to utility grid…
LOGISTICS Marine and Storage Terminals and Pipelines Three marine terminals; 400 MBD of crude oil and product throughput VLCC capable dock Over 7 mmbbls feedstock and product storage 114 miles of active pipelines Pipeline access…
VALUE OF LOGISTICS ASSETS Extensive proprietary logistics system Marketbased rates on existing volumes generates EBITDA of 90 to 110 million EBITDA growth potential from system optimization and third parties Tesoro Logistics LP…
TESORO LOGISTICS LP IMPACT OF ACQUISITIONS 3.5 3.8 TLLP EBITDA TLLP Enterprise Value millions billions 225 260 2.1 2.3 135 150 1.3 100 110 TSO TSO equity equity TSO value value equity value 2013E Post Announced Post…
WEST COAST MARKET OVERVIEW PADD V and California economic recovery expected to continue Demand expected to improve, driven by distillates Stable refining margin outlook Regulatory environment is challenging but manageable Future…
WEST COAST SUPPLY AND DEMAND Demand expected to improve, driven by distillates Excess refining capacity exists in PADD V Current PADD V Clean Products Production Capacity MBD Increasing demand for distillates offsets…
LOS ANGELES 321 CRACK SPREAD OUTLOOK /bbl 30 Los Angeles 321 barrel 2004 2011 Average 18.48 25 2009 2011 Average 13.71 2013 2018 Range 13.25 16.10 20 15 10 5 0 2004 2006 2008 2010 2012 2014 2016 2018 Stable long…
CARB DIESEL TO CARB GASOLINE OUTLOOK /bbl 14 Differential barrel 12 2004 2011 Average 0.94 10 2009 2011 Average 0.08 8 2013 2018 Range 2.90 5.15 6 4 2 0 (2)2004 2006 2008 2010 2012 2014 2016 2018 (4) (6) (8) Growth…
PADD V DEMAND FOR GASOLINE RELATIVE TO DISTILLATES 1:11 Post Project Combined Capability Market Demand Favors Distillates 1.2 1.2:1 Wilmington & Carson Capability Ratio of Gasoline Approximate limit of FCC refineries to 1.4:1…
CALIFORNIA REGULATORY ENVIRONMENT Acquisition significantly improves Companys ability to address Lower Gasoline to Distillate Ratio More challenging AB32 regulations Competitive Stationary source air emissions reductions…
POTENTIAL INCREASES IN PADD V CRUDE OIL AVAILABILITY Beaufort, Chukchi Kenai Canadian Bakken Monterey Shale West Texas Additional crude oil supply should improve the West Coast crude oil cost position 28
EXECUTION CAPABILITIES Comprehensive integration approach Well defined roles and responsibilities Execution objectives Stability of operations Synergy capture Speed Led by senior executive management Proven track record…
SUMMARY Transformational opportunity for Tesoro Combines two assets creating world scale refinery Expands integrated refining and marketing business Strengthens West Coast business Unique opportunity to capture annual synergies of 250…
THE NEW TESORO Current Future Refineries 7 7 Capacity (MBD) 675 941 Refining Complexity 9.8 10.5 Kenai, AK Retail Stations 1,375 2,175 72 MBD Employees 5,400 7,100 Anacortes, WA Mandan, ND 120 MBD Retail Sales (MBD) 125 255 68 MBD…
APPENDIX NONGAAP FINANCIAL MEASURE EBITDA represents earnings before interest and financing costs, interest income, income taxes, and depreciation and amortization expense. We present EBITDA because we believe some investors and…
Loading...
