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Analyst Day – Tesoro Corporation

Tesoro Corporation · Nov 10, 2009 · 49 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. Analyst Day – Tesoro Corporation – slide 1
    Analyst and Investor Presentation November 2009
  2. Analyst Day – Tesoro Corporation – slide 2
    Agenda Reviewing our strategy Tesoros growth platform since 1998 2009 Performance Executing our strategy, delivering on our goals Building on our Base, TSO 2013 Adding shareholder value through organic growth 3
  3. Analyst Day – Tesoro Corporation – slide 3
    Reviewing Our Strategy Improve Refinery Unlock Pay Down Enhance Financial Acquisition Synergies Debt Asset Performance Lever Capital Required, Minimal Capital Investment Balance Sheet Debt Time Constraints Time TSO…
  4. Analyst Day – Tesoro Corporation – slide 4
    2007 Analyst Day Capital Program 5 billion dollars over 5 years in millions 1,310 1,100 1,140 845 680 2008 2009 2010 2011 2012 Multi-Year, Large Scope Projects: Golden Eagle Sour Up - 230 350MM Los Angeles Upgrade - 200…
  5. Analyst Day – Tesoro Corporation – slide 5
    We Saw A Decline, But Not An Economic Collapse Tesoro Index, /bbl 15 TSO 2007 Forecast: Supply additions in 2009-10 would pressure margins 10 5 2007 2008 2009* 2010 2011 2012 2013 2014 2015 2016 Actual 2007 10-Yr…
  6. Analyst Day – Tesoro Corporation – slide 6
    We Responded To The Lower Margin Environment Reduce Capital Program Scope Reduce Debt Inventories Inventory draw of Actual spend 377 million Paid down 479 million 6.7 million barrels below original estimate of revolver borrowings…
  7. Analyst Day – Tesoro Corporation – slide 7
    Agenda Reviewing our strategy The companys growth platform 2009 Performance Executing our strategy, delivering on our goals 8
  8. Analyst Day – Tesoro Corporation – slide 8
    2009 Goals For Success Lower breakeven costs Balance capital spending to operating cash flow Facilitate in the hopper capital program 9
  9. Analyst Day – Tesoro Corporation – slide 9
    Lower Breakeven Costs As Presented at 2008 Analyst Day, /bbl 10.50 1.60 0.65 0.20 0.10 7.95 2008 Cash Margin Capture Reduced Capital Energy Maintenance Cash Breakeven Breakeven Program Improvements Improvements After…
  10. Analyst Day – Tesoro Corporation – slide 10
    Margin Capture 2009 Incremental EBITDA Over 2008 ( in millions, unless noted) Non-Capital Improvements Original FY Est. Current FY Est. Crude and Feedstocks 110 210 Product Realizations / Optimization 40 80 Transportation Savings 60…
  11. Analyst Day – Tesoro Corporation – slide 11
    2009 Energy and Maintenance Improvements Energy Expense Versus 2008, in millions Maintenance Expense Versus 2008, in millions 20 10 10 0 (5) million, excluding (10) one-time events (20) (30) (40) (50) (45) 2008 2009e 2008…
  12. Analyst Day – Tesoro Corporation – slide 12
    Cash Flow Through 3Q 2009 in millions 669 (326) (66) (45) 534 282 Maintain capital discipline 20 Beginning Debt Operating Capex Revolver Dividend and Ending Cash Cash Offering* Cash Repayment Other * Net of…
  13. Analyst Day – Tesoro Corporation – slide 13
    Lower Breakeven Costs As Presented at 2008 Analyst Day, /bbl 10.50 1.60 0.65 0.20 0.10 7.95 2008 Breakeven Margin Capture Reduced Capital Energy Maintenance Breakeven After Estimate Program Improvements Improvements…
  14. Analyst Day – Tesoro Corporation – slide 14
    Facilitate In The Hopper Capital Program In The Hopper Total Project Ideas: Greater than 300 Average Project spend: 2 3 million Average simple payback: Two years Strategy: 1) Fund from available capital 2) High return 3) Quick…
  15. Analyst Day – Tesoro Corporation – slide 15
    2009 Performance Summary We continue to deliver on our 2009 business plan We have improved our cash balance by 514 from the start of the year We are now at a point where we can fund the organic growth opportunities, adding…
  16. Analyst Day – Tesoro Corporation – slide 16
    Agenda Reviewing our strategy The companys growth platform 2009 Performance Executing our strategy, delivering on our goals Building on our Base, TSO 2013 Adding shareholder value through organic growth 17
  17. Analyst Day – Tesoro Corporation – slide 17
    Building on our Base, TSO 2013 Markets Are Just As Important As Metals California was hit first and balanced more quickly Mid-Continent assets retain crude advantage Low utilization will limit margin upside 2010-2013 outlook is…
  18. Analyst Day – Tesoro Corporation – slide 18
    Structural Changes Occurring In Other Areas Global Refinery Run Declines, 1H09 vs 1H07 10% 5% 0% -5% -10% -15% Refining throughput is being reduced, but it is mainly occurring outside of our markets Source: PIRA 19
  19. Analyst Day – Tesoro Corporation – slide 19
    The West Coast Premium Still Exists USWC Margin Premium to USGC, /bbl 25 20 2002-09 Avg 15 Ex-Hurricane 8.50/bbl 10 2008-09 Avg 5 Ex-Hurricane 6.00/bbl 0 (5) Hurricane impact on USGC margins (10) 2002 2003 2004 2005 2006…
  20. Analyst Day – Tesoro Corporation – slide 20
    Why Does The West Coast Premium Still Exist 2009 vs 2007, through July 20% 13% 11% 10% 0% -1% -1% -10% -5% -5% -12% -14% -20% -30% -40% -50% -60% -61% -70% PADD 1 PADD 3 PADD 5 PADD 1 PADD 3 PADD 5 PADD 1 PADD 3 PADD 5 Imports…
  21. Analyst Day – Tesoro Corporation – slide 21
    Attractive Mid-Continent Market North Dakota Supply/Demand Balance, MBPD PADD 4 cumulative y-on-y increase 250 25% 200 20% 150 15% 100 10% 50 5% 0 0% 2004 2005 2006 2007 2008 2009 2004 2005 2006 2007 2008 N. Dakota Crude…
  22. Analyst Day – Tesoro Corporation – slide 22
    Building on our Base, TSO 2013 Markets Are Just As Important As Metals California was hit first and balanced more quickly Mid-Continent assets retain crude advantage Low utilization will limit margin upside 2010-2013 outlook is…
  23. Analyst Day – Tesoro Corporation – slide 23
    Low Utilization Will Limit Margin Upside Economy begins recovery 2H09, no exceptional post-recession growth Crude production is lighter and more sour Diesel demand growing faster than gasoline in all regions US gasoline demand…
  24. Analyst Day – Tesoro Corporation – slide 24
    Base Scenario, 2013 Looks Like 2009 Tesoro Index, /bbl System Throughput , MBPD 20 650 15 10 550 5 0 450 2007 2008 2009e 2010e 2011e 2012e 2013e Index Throughput But we can still drive meaningful growth to offset a flat…
  25. Analyst Day – Tesoro Corporation – slide 25
    Building on our Base, TSO 2013 Markets Are Just As Important As Metals California was hit first and balanced more quickly Mid-Continent assets retain crude advantage Low utilization will limit margin upside 2010-2013 outlook is…
  26. Analyst Day – Tesoro Corporation – slide 26
    Building on our Base, TSO 2013 How we fill the value curve through earnings growth Illustrative VALUE We fill the value curve through high-return capital initiatives, and enhance the assets Non-capital Initiatives are…
  27. Analyst Day – Tesoro Corporation – slide 27
    2010 Improvements /bbl, change from 2009 Forecast 10.25 2.00 0.05 0.20 ( 0.20 ) 8.20 2009 Breakeven Plan Energy Efficiency Throughput Capital Spend 2010 Breakeven Estimate Improvements Estimate See appendix for…
  28. Analyst Day – Tesoro Corporation – slide 28
    2010 Plan Improvements Non-capital initiatives, generate 160-170 million in EBITDA Total Income Improvements, in millions Lower distribution costs Right size Jones Act fleet Increase proprietary terminal utilization 90 Lower…
  29. Analyst Day – Tesoro Corporation – slide 29
    2010 Capital Program* Capital Spend by Region, in millions Capital Spending by Category, in millions 330 285 205 155 135 115 55 50 20 CA Mid-Con PNW Mid-Pac Admin Regulatory Turnaround Maintenance Income Improvement Total…
  30. Analyst Day – Tesoro Corporation – slide 30
    2010 Energy and Maintenance Improvements Energy Expense Versus 2008, in millions Maintenance Expense Versus 2008, in millions 20 10 10 0 (10) (20) (20) (30) (40) (50) (45) (50) (60) 2008 2009e 2010e 2008 2009e 2010e…
  31. Analyst Day – Tesoro Corporation – slide 31
    2010 - 2013 Improvements /bbl, change from 2009 Forecast 10.25 2.00 0.05 0.20 ( 0.20 ) 8.20 7.20 2009 Breakeven Plan Energy Throughput Capital Spend 2010 Breakeven 2013 Breakeven Estimate Improvements Efficiency Estimate…
  32. Analyst Day – Tesoro Corporation – slide 32
    Non-Capital Initiatives EBITDA contribution over prior year, in millions 170 390 20M non-repeatable 2009 Estimate 2010 Estimate 2011 2012 2013 We can maintain the box, and over time, strengthen our ability to provide…
  33. Analyst Day – Tesoro Corporation – slide 33
    Quick Hit Capital Projects: 300 million in 3 years Quick Execution, High Return Focused on High Probability, Return Areas 300 Projects Under Evaluation 50% of projects under 500,000 Only 10% over 5 million Examples Cat feed…
  34. Analyst Day – Tesoro Corporation – slide 34
    Quick Hit Capital Program in millions 2010 2011 2012 Total Total Quick Hit Spend 50 80 100 150 175 250 335 Cumulative Annual EBITDA 25 80 - 95 150 175 165 - 220 in millions, at constant 2009 pricing 250 200 150 100 50 0…
  35. Analyst Day – Tesoro Corporation – slide 35
    Capital Program* Capital Spend by Region, in millions Capital Spending by Bucket, in millions 2,000 1,875 1000 Reg TAR Maint Inc 800 1,500 600 1,000 400 450 375 500 200 175 0 0 CA PNW Mid-Con Mid-Pac 2010 2011 2012 2013…
  36. Analyst Day – Tesoro Corporation – slide 36
    2011-2013 Energy and Maintenance Improvements Energy Expense Versus 2008, in millions Maintenance Expense Versus 2008, in millions 20 10 10 0 (10) (20) (20) (30) (40) (35) (40) (50) (45) (45) (45) (50) (60) (55) (55) 2008…
  37. Analyst Day – Tesoro Corporation – slide 37
    Building On Our Base, TSO 2013 /bbl, change from 2009 Forecast 10.25 2.05 2013 Tesoro Index 1.00 9.00/bbl - - 7.20 2009 Breakeven 2010 2011-2013 Opex 2011-2013 Inc. 2013 Impact 2013 Breakeven Estimate Improvements Capital…
  38. Analyst Day – Tesoro Corporation – slide 38
    Building on our Base, TSO 2013 Our corporate strategy hasnt changed, but weve adapted to a shifting market We continue to execute on our non-capital margin capture initiatives Quick hit income improvement capital drives significant…
  39. Analyst Day – Tesoro Corporation – slide 39
    Appendix
  40. Analyst Day – Tesoro Corporation – slide 40
    Assumptions 2010 Commodity Forecast: Tesoro Index: 9.20/bbl Henry Hub Natural Gas Forward Strip: 5.76/Mmbtu* Cash Breakeven, Quick Hit Capital: All values during 2010-2013 assume constant throughput, energy prices Energy and…
  41. Analyst Day – Tesoro Corporation – slide 41
    Supplemental Financial and Operational Info California Region 2007 2008 2009 1Q 2Q 3Q 4Q Year 1Q 2Q 3Q 4Q Year 1Q 2Q Throughput (mbpd) Heavy Crude 71 119 168 174 133 157 144 188 166 164 164 173 Light Crude 37 82 83 82 72 83 82…
  42. Analyst Day – Tesoro Corporation – slide 42
    Supplemental Financial and Operational Info Pacific Northwest Region 2007 2008 2009 1Q 2Q 3Q 4Q Year 1Q 2Q 3Q 4Q Year 1Q 2Q Throughput (mbpd) Heavy Crude 11 8 11 14 11 12 13 1 - 7 - - Light Crude 148 177 169 160 163 143 153 148…
  43. Analyst Day – Tesoro Corporation – slide 43
    Supplemental Financial and Operational Info Mid-Pacific 2007 2008 2009 1Q 2Q 3Q 4Q Year 1Q 2Q 3Q 4Q Year 1Q 2Q Throughput (mbpd) Heavy Crude 17 13 13 15 15 7 27 32 20 21 17 13 Light Crude 66 74 68 59 66 60 44 40 46 48 56 53…
  44. Analyst Day – Tesoro Corporation – slide 44
    Supplemental Financial and Operational Info Mid-Continent 2007 2008 2009 1Q 2Q 3Q 4Q Year 1Q 2Q 3Q 4Q Year 1Q 2Q Throughput (mbpd) Heavy Crude 97 108 111 107 106 104 109 110 97 105 98 104 Light Crude 3 5 5 4 4 3 5 5 3 4 3 5…
  45. Analyst Day – Tesoro Corporation – slide 45
    Supplemental Financial and Operational Info Total Refining 2007 2008 2009 1Q 2Q 3Q 4Q Year 1Q 2Q 3Q 4Q Year 1Q 2Q Throughput (mbpd) Heavy Crude 99 140 192 203 159 176 184 221 186 192 181 186 Light Crude 348 441 431 408 407 390…
  46. Analyst Day – Tesoro Corporation – slide 46
    Supplemental Financial and Operational Info Refined Product Sales 2007 2008 2009 1Q 2Q 3Q 4Q Year 1Q 2Q 3Q 4Q Year 1Q 2Q Refined Product Sales (mpbd) Gasoline & Blendstocks 252 326 347 349 319 330 334 327 313 326 307 317 Jet…
  47. Analyst Day – Tesoro Corporation – slide 47
    Supplemental Financial and Operational Info 2007 2008 2009 1Q 2Q 3Q 4Q Year 1Q 2Q 3Q 4Q Year 1Q 2Q Number of Branded Stations Tesoro Operated 194 453 449 449 449 444 437 391 389 389 389 388 Jobber/Dealer 270 438 453 462 462 495…
  48. Analyst Day – Tesoro Corporation – slide 48
    Supplemental Financial and Operational Info 2007 2008 2009 1Q 2Q 3Q 4Q Year 1Q 2Q 3Q 4Q Year 1Q 2Q Average Fuel Sales Per Month Per Station (thousands of gallons) Tesoro - Operated 98 176 230 223 197 215 205 208 219 212 214 226…
  49. Analyst Day – Tesoro Corporation – slide 49
    Supplemental Financial and Operational Info 2007 2008 2009 1Q 2Q 3Q 4Q Year 1Q 2Q 3Q 4Q Year 1Q 2Q Capital Expenditures Refining California 89 131 148 173 541 132 86 71 102 391 44 60 Pacific Northwest 30 26 16 24 96 14 11 13 15…

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