Investor Presentation Credit Suisse Energy Summit February 2014
Valero Energy Overview Worlds largest independent refiner 16 refineries 2.9 million barrels per day (BPD) of throughput capacity, excluding shutdown Aruba refinery Created publicly traded Valero Energy Partners LP (NYSE: VLP), a…
Valeros Geographically Diverse Operations Capacities (000 bpd) Total Through Crude Nelson Refinery -put Oil Index Corpus Christi 325 205 19.9 Houston 165 90 15.1 Meraux 135 135 10.3 Port Arthur 350 330 12.6 St. Charles 280…
Valeros Strategy to Enhance Returns and Increase Long-term Shareholder Value Invest to Increase MLP-able logistics assets Expand hydrocrackers with high distillates yield and Exploit North leverage to natural gas American Process…
Key Market Trends Growth in U.S. and Canadian shale development provides North American resources advantage Expect strong supply growth in crude oil, natural gas, and natural gas liquids (NGLs) Industry is making significant…
U.S. and Canadian Production Growth Provides Resource Advantage to North American Refiners MMBPD U.S. and Canadian Crude Production vs. U.S. Crude Imports 18 Largest growth coming from 16 U.S. shale crude and heavy Canadian crude…
Valeros Estimate of Marginal Light Crude Oil Prices per Barrel within 24 Months Alberta Brent to Eastern Canada -13 to -16 Alberta to Bakken Rail 11 to 12/bbl Bakken Rail 9/bbl 1 to 2/bbl Brent 0 to -4 Bakken Brent U.S. Ship -12…
Valeros Strategy to Supply Incremental Volumes of Cost-Advantaged Crude Oil Gulf Coast Region Expect refineries to benefit as flows increase on cost- efficient pipelines St. Charles: approximately 20 MBPD rail unloading capacity…
Lower-Cost Natural Gas Provides Structural Advantage to U.S. and Canadian Refiners Significant production from shale basins is expected to keep U.S. natural gas prices low and disconnected from global oil and LNG prices for…
Global Distillates Demand Growth Yields Higher Margins Distillates (diesel, kero, jet fuel) margins are significantly higher than gasoline due to less spare distillates production capacity versus demand Distillates demand growth rate…
U.S. Refining Capacity Is Globally Competitive and Continues to Take Market Share U.S. flipped from importer to exporter on lower local demand and competitive advantages Refiners in PADDs 2, 3, and 4 have higher utilization due to…
Continued Global Demand Growth Important to Refining Margins Emerging markets lead in terms of global petroleum demand growth Particularly strong growth in Latin America, Middle East, Africa, Asia Refining is a global business world…
World Refinery Capacity Growth Expect significant new global refining additions in the next several years Mainly new plants in Asia and the Middle East, where demand growth is strong New capacity announcements from Brazil, Mexico, and…
Growth Investments Comprise Approximately Half of Our Capital Spending Valero Capital Spending (millions) Total Total 3,000 2,755 Strategic/ Economic 1,525 Growth 1,255 Sustaining/ Reliability Stay- 795 720 Turnarounds in-…
Growth Investments Primarily in Logistics and Processing Cost-Advantaged Crude Oil 2013 Growth Investments 2014 Growth Investments Nat Gas / NGL Upgrading Nat Gas / NGL Upgrading & Petchems & Petchems 2% Other Processing…
Logistics Growth Investments Strategy Increase access to cost-advantaged crudes Increase capability to export products and crudes Growth Investments 5,320 rail cars purchased, delivery in 4Q12 to 2Q15 Approximately 55% general…
Valero Energy Partners LP (NYSE: VLP) Traditional, logistics MLP with 100% Valero Energy Partners Initial Assets fee-based revenues Valero retained significant ownership and control of VLP 68.6% of LP ownership comprised of common…
Hydrocracking Growth Investments Increase Distillates Production Strategy New St. Charles Hydrocracker Emphasize distillates production and natural gas consumption Designed to benefit from our outlook of: Relatively high crude and…
Investments to Process More Light Crude Oil Strategy Increase processing of North American cost- advantaged crude oil versus purchased feedstocks Fill underutilized conversion capacity Growth Investments Constructing two new crude…
Improving Our Refining Operations Industry surveys reflect significant Improvement in Key Benchmarks improvement over last six years 100% Improved reliability also yielding benefits in staffing, operating cost, and energy 1st…
Valeros Ethanol Segment Generating Strong Returns Ethanol Segment EBITDA 10 plants with total production millions 550 capacity of 1.2 billion gallons/year 450 Significant cash generated since investment 350 Acquired portfolio…
Returning More Cash to Stockholders and Maintaining Financial Strength Returning more cash to stockholders Cash Returned to VLO Stockholders Increased quarterly dividend from 0.05 per millions share in 2Q11 to 0.25 per share in 1Q14…
We Believe Valero Is an Excellent Buy Today Expect continued growth in North American oil, gas, and NGLs production Key Market Trends Industry installing significant infrastructure to move crude oil to refining markets and process…
Appendix 25
Increasing Our Products Exports Capability Valeros U.S. Products Exports Exports enable Valero to maintain MBPD utilization rates or capture 600 incremental margin Valero exports products based on 500 Diesel economic optimization…
Upgrading Natural Gas to Methanol Strategy Methanol Demand Gas-to-liquids upgrading very attractive (million tonnes per year) syngas pricing 110 12 U.S. is a growing methanol market and 100 Estimate 7% average 11 annual growth…
NGLs Upgrading Presents an Opportunity to Create Value MMBPD U.S. NGLs Supply Strategy 4.0 Consistent strategy feedstock advantage and 3.5 3.0 bolt-on/synergistic project 2.5 Expect continued growth in supply of NGLs and 2.0…
Unlocked Value via Retail Spinoff Spun off to stockholders our retail business on May 1, 2013 CST Brands, Inc. trading on the NYSE under the ticker symbol CST CST has traded at more than double the earnings valuation of VLO,…
Improving Our Safety and Environmental Performance Personnel Safety Tier 1 Process Safety Environmental Events 1.8 0.20 40 20 Legacy Refineries Employees Total Air Emissions 1.6 Total Recordable Incident Rate (TRIR)…
Our Crude and Feedstock Supply MBPD 2013 Crude Oil Sources 1,200 1,000 800 600 400 200 0 North America Middle East Africa South America Other Asia/ Europe Australia Valeros crude and intermediate feedstock runs were…
Valeros Processing of Cost-Advantaged U.S. and Canadian Crude Continues to Grow MBPD Gulf Coast Mid-Con MBPD 900 West Coast Quebec 1,600 Non-U.S. & Canadian 800 1,400 700 1,200 600 1,000 500 800 400 600 300 400 200 100 200 0…
Crude Oil Prices Versus ICE Brent /bbl 5 0 -5 -10 Maya Mars -15 ANS WTI -20 LLS -25 Source: Argus; 2014 year-to-date through January 31. LLS prices are roll adjusted. 33
Definitions of Valeros Regional Indicator Margins Gulf Coast Indicator: (GC Colonial 85 CBOB A grade- LLS) x 60% + (GC ULSD 10ppm Colonial Pipeline prompt - LLS) x 40% + (LLS - Maya Formula Pricing) x 40% + (LLS - Mars Month 1) x…
Logistics Constraints Create Regional Crude Discounts in U.S. and Canada Brent less Crude Prices I Crude Pricing by Location (Trailing 12-months, /bbl) B (A) LLS E Trailing 4-weeks (B) Syncrude Lighter (C) WTI Cush. (D)…
Canadian Heavy Crudes Have Several Options to the Gulf Coast Pipeline industry has several options in various stages to move crude oil from Canada to the U.S. Gulf Coast Seaway Currently shipping light and heavy sour from Enbridge…
Valeros View on U.S. Gulf Coast Medium and Heavy Oil Prices Versus Brent U.S. and Canadian Light Crude Oil on Gulf Coast LLS, WTI, Bakken, Eagle Ford, Permian, etc. Plentiful supply and price advantage pushes out foreign imports of…
Increasing U.S. Oil and Natural Gas Production Provides Cost Advantage for Refiners Bcf/day MBPD MBPD Natural Gas Production Crude Oil Imports & Production 70 10,500 8,000 Imports 10,000 Production 7,500 65 9,500 7,000 60 9,000…
U.S. Gulf Coast is Benefitting from Cost-Efficient Crude Oil Pipeline Additions Rapid increase in pipeline capacities to move inland North American light and heavy crude oils to the Gulf Coast Light crudes have been pricing below LLS…
Growth of Crude Oil Pipelines to U.S. Gulf Coast Year-End Throughput Capacities, 000 bpd 2011 2012 2013E 2014E 2015E Announced Start-up Cushing Seaway 150 400 850 850 2Q12, 1Q13, 2Q14 Keystone MarketLink - - - 700 830 1Q14, 2015…
Atlantic Basin Closures Reduce Excess Capacity Capacity closures have been concentrated in the Atlantic Basin: U.S. East Coast, Caribbean, Western Europe; expect more will occur Combined with poor reliability and low utilization in…
Global Refining Capacity Rationalization CDU Capacity Year CDU Capacity Year Location Owner Closed (MBPD) Closed Location Owner Closed (MBPD) Closed Perth Amboy, NJ Chevron 80 2008 Coryton, U.K. Petroplus 220 2012 Bakersfield,CA Big…
Global Refining Capacity For Sale or Under Strategic Review CDU Capacity Location Owner (MBPD) Lytton, Australia Caltex 109 Geelong, Australia Shell 110 Nishihara, Japan Petrobras/Sumitomo 95 Inchon, Korea SK Energy 270 Whitegate,…
Low-Cost U.S. Natural Gas Provides Competitive Advantage U.S. natural gas has traded at a significant discount to Brent crude oil price (on energy equivalent basis) Prices are expected to remain low and disconnected from global oil…
Gasoline Fundamentals 25 USGC Brent Gasoline Crack (per bbl) U.S. Gasoline Demand (mmbpd) 10 20 15 9.5 10 9 5 0 8.5 -5 8 -10 -15 7.5 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov…
Distillate Fundamentals USGC Brent ULSD Crack (per bbl) 4.8 U.S. Distillate Demand (mmbpd) 25 4.6 20 4.4 4.2 15 4 3.8 10 3.6 5 3.4 3.2 0 3 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep…
U.S. Transport Indicators U.S. VMT Growth vs Gasoline Demand Growth Airline Traffic Indicators U.S. Gasoline Demand Growth U.S. VMT Growth 3.5 90% U.S. Gasoline Demand Growth 12MMA U.S. VMT Growth 12MMA International 5.0% Source:…
U.S. Transport Indicators: Trucking ATA Seasonally Adj Truck Tonnage Index ATA Non-Seasonally Adj Truck Tonnage Index 135 145 130 Current Year Current Year 12-Mth Moving Avg 135 12-Mth Moving Avg 125 Index, 2000 = 100 Index,…
U.S. Gasoline Exports by Destination Strong demand from Latin America, including Mexico, have kept gasoline exports elevated 700 12 Month Moving Average, MBPD Other 600 Europe 500 Other Latin America Mexico 400 Canada 300…
U.S. Gasoline Imports by Source Gasoline imports have declined steadily since 2007 Shutdown of the Atlantic Basin refineries will keep pressure on this trend 12 Month Moving Average, MBPD Other 1400 Europe Other Latin America…
U.S. Diesel Exports by Destination Diesel exports to Latin America have exceeded exports to Europe in recent years 1400 12 Month Moving Average, MBPD 1200 Other 1000 Europe Other Latin America 800 Mexico Canada 600 Latest 4…
U.S. Shifted to Net Exporter The transition of the U.S. refining system to being a net exporter to the world market has mitigated the impact of declining domestic demand Large quantities of U.S. diesel and gasoline exports to Latin…
U.S. Shifted to Net Exporter As a result of the continued shift towards exports, U.S. net exports of petroleum products have increased from 335 MBPD in 2010 to 1,959 MBPD in 2013 Diesel net exports remain strong, with U.S. refiners…
U.S. Competitively Exporting into Growing Markets U.S. has become a net exporter of refined products due to growth in developing countries, Atlantic Basin capacity closures, Western European diesel demand, and Latin American refining…
Ethanol Reconciliation of Operating Income to EBITDA 2Q09 Ethanol (millions) 4Q09 2010 2011 2012 2013 Operating Income 165 209 396 (47) 491 + Depreciation and amortization 18 36 39 42 45 expense = EBITDA 183 245 435 (5) 536 58
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