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JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation

Valero Energy Corporation · Jun 15, 2015 · 59 slides

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Slides

  1. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 1
    Investor Presentation June 2015
  2. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 2
    Who We Are Worlds Largest Independent Refiner 15 refineries, 2.9 million barrels per day (BPD) of high-complexity throughput capacity Greater than 70% of refining capacity located in U.S. Gulf Coast and Mid-Continent Approximately…
  3. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 3
    Assets Concentrated in Advantaged Locations Capacities (MBPD) Nelson Refinery Throughput Crude Index Corpus Christi 325 205 19.9 Houston 175 90 15.4 Meraux 135 125 9.7 Port Arthur 375 335 12.4 St. Charles 290 215 16.0 Texas City 260…
  4. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 4
    Key Market Trends U.S. and Canadian crude oil, natural gas, and natural gas liquids (NGLs) production growth is providing cost advantages to North American refiners - Lower crude prices may temporarily constrain production growth…
  5. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 5
    Production Growth Provides Resource Advantage to North American Refiners U.S. Crude Oil Production and U.S. Natural Gas Production MBPD Imports (Bcf/day) 10,500 80 Imports 9,500 Production 75 70 8,500 65 7,500 60 6,500…
  6. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 6
    Global Petroleum Demand Projected to Grow Emerging markets in Latin America, Middle East, Africa, and Asia lead demand growth World Petroleum Demand Growth MMBPD 3.5 2.5 1.5 0.5 -0.5 -1.5 U.S. OECD (excl. U.S.)…
  7. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 7
    U.S. Is Growing Product Exports Market Share Refiners in U.S. Gulf Coast are the largest source of products exported to Latin America and countries in the Atlantic Basin U. S. Product Exports By Source U. S. Product Exports By…
  8. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 8
    Strategy to Enhance Stockholder Returns Demonstrate commitment to safe and reliable operations Operations Continuously improve operating performance Excellence Optimize margins with refining systems feedstock and product markets…
  9. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 9
    Persistent Focus Drives Results in Safety, Environmental, and Regulatory Compliance Personnel Safety Tier 1 Process Safety Environmental Events 1.8 0.20 40 20 Total Recordable Incident Rate (TRIR) 1.6 Employees Contractors…
  10. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 10
    Excellent Operating Performance through Continuous Improvements Reliability drives safe and 1st profitable operations Quartile 2012 Seven of our refineries are first 2010 quartile in mechanical availability 2nd Quartile 2008…
  11. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 11
    Investments, Operations Excellence, and Commercial Optimization Drive High Utilization Valero Refinery Utilization Rates System-wide mechanical availability near 1st quartile since 2011 96% 95% 92% 92% 88% 87% 2010…
  12. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 12
    Refining and Logistics Growth Investments Enhance Feedstock Flexibility Valeros Gulf Coast Region Quarterly Feedstock Mix 2010 2015(1) 37% 34% 30% 23% 26% 17% 10% 12% 12% 4% Heavy sour Medium/light sour Sweet Residuals…
  13. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 13
    Capital Allocation Framework Emphasizes Discipline and Stockholder Returns Non-Discretionary Sustaining Capex Dividends Debt and Cash Estimate 1.5 billion or Focus on sustainability Maintain investment lower annual stay-in-…
  14. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 14
    Increasing Dividends and Stock Buybacks Annual Dividend Per Share Increased dividend by 45% in 1.20 1Q15 versus 4Q14 1.00 0.80 Regular dividend increases over 0.60 2Q last three years 0.40 0.20 1Q Accelerated stock buybacks…
  15. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 15
    Advancing Growth Investments While Managing Capital Spending Lower millions 2,650 2,400 Logistics Growth 400 715 Refining, Renewables, & Other 790 Growth (1) 300 Turnarounds & Catalyst 695 655 Sustaining 765 730 2015E…
  16. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 16
    Logistics Investments Enhance Valeros Feedstock Flexibility and Export Capability Pipelines Connection to Centurion pipeline in Childress, TX and incremental 40 to 50 MBPD Midland-priced crude as substitute for Cushing-priced crude…
  17. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 17
    Crude Topper Investments Very Attractive 160 MBPD new topping capacity Combined Projects Estimates designed to process up to 50 API Total investment(1) 750 MM domestic sweet crude Annual EBITDA contribution(2) 500 MM Unlevered IRR…
  18. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 18
    Investments in Natural Gas and NGLs Upgrading Converts natural gas to incremental distillate via hydrogen Completed Merauxs 20 MBPD capacity expansion in 4Q14; Hydrocracker expect approximately 90 million annual EBITDA contribution…
  19. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 19
    Sponsored MLP Valero Energy Partners (NYSE:VLP) Valero owns entire 2% general partner interest, all incentive Growth-oriented distribution rights, and 69.6% LP interest logistics MLP with High-quality assets integrated with Valeros…
  20. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 20
    VLP Delivering Growth 1st acquisition Texas Crude Adjusted EBITDA Attributable to VLP Systems Business in July 2014 (millions) for 154 million 200 2nd acquisition Houston and St. Charles Terminal Services Business in March 2015…
  21. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 21
    Significant Inventory of Estimated MLP Eligible EBITDA at Valero millions 46 814 800 (15) 34 24 (75) Dec 2013 July 2014 Drop March 2015 Drop 2014 - 2015 2016 - 2017 Diamond Pipeline Current Guidance Guidance (with Down…
  22. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 22
    Estimated Inventory of Eligible MLP Assets Pipelines(1) Over 1,200 miles of active pipelines Expect start-up of 440-mile Diamond Pipeline from Cushing to Memphis refinery in 1H17 Racks, Terminals, and Storage(1) Over 100 million…
  23. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 23
    We Believe VLO Is an Excellent Investment Majority of capacity has access to cost-advantaged crude, natural gas, NGLs, and corn Proven operations excellence Emphasis on capital allocation to stockholders Discipline and rigor in…
  24. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 24
    Appendix Topic Page Valero 2015 Goals 26 Ethanol Segment 27 Investment Management Process 28 Capital Spending and Investment Details 29 38 Valero Energy Partners LP 39 40 Refining Operations Highlights 41 45 Macro Outlook 46 Estimated…
  25. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 25
    Key Goals Expected in 2015 Operations Excellence Start up Montreal crude terminal with the Enbridge Line 9B reversal and lower Quebec refinerys crude costs versus Brent compared to 2014 Grow product export market share and increase…
  26. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 26
    Ethanol Investments Have Performed Well 11 plants acquired between Cumulative Capex and EBITDA 2Q09 and 1Q14 for 794MM, millions Excellent less than 35% of replacement 2,254 value Acquisitions 1.3 billion gallons total annual…
  27. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 27
    Gated Investment Management Process PHASE 1 PHASE 2 PHASE 3 PHASE 4 APPROVED Opportunity Lead Case Refinement Execution Startup and Evaluation Development Define project Detail Evaluate Identify Select lead case scope and engineering,…
  28. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 28
    Refining & Renewables Capital Focused on Capturing Benefits of Key Long-Term Trends millions 790 40 150 Nat Gas & Petchems 110 Other Projects 300 Hydrocracking 490 115 Advantaged Crude Processing 105 30 50 2015E 2016E…
  29. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 29
    Allocating Significant Growth Capital to Logistics millions 715 5 Marine, Docks and Other Logistics Pipelines and Tanks 400 45 665 Railcars and Unloading 180 175 45 2015E 2016E Railcars spending declines as receipt of…
  30. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 30
    McKee Diesel Recovery Improvement and CDU Expansion Startup Expected in 2H15 Project Estimates Investment Highlights Total investment 140 MM Adding 25 MBPD crude unit capacity Annual EBITDA contribution(1) 100 MM and parallel light…
  31. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 31
    Meraux Hydrocracker Conversion Completed December 2014 Project Estimates Investment Highlights Total investment 260 MM Converted hydrotreater into high- Annual EBITDA contribution(1) 90 MM pressure hydrocracker and Unlevered IRR…
  32. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 32
    Houston and Corpus Christi Crude Topping Units Expected Online in 1st Half of 2016 Houston Corpus Christi Houston Estimates Incremental Volume (MBPD) Estimates Incremental Volume (MBPD) Feeds Feeds Eagle Ford crude 90 Eagle Ford…
  33. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 33
    Diamond Pipeline Project Estimates Investment Highlights Total investment(1) 484 MM Valero holds option until January Cumulative spend through 2014 Zero 2016 to acquire 50% interest in Annual EBITDA contribution(2) 46 MM pipeline…
  34. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 34
    Estimated Key Price Sensitivities on Project Economics McKee Diesel Corpus Change in Estimated EBITDA(1) Relative to 2014(2) Prices Recovery & CDU Meraux HCU Christi Houston (millions/year) Expansion Expansion Topper Topper ICE Brent,…
  35. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 35
    Project Price Set Assumptions Driver (/bbl) 2014 Average ICE Brent 99.49 ICE Brent WTI 6.35 ICE Brent LLS 2.75 USGC CBOB ICE Brent 3.52 G3 CBOB WTI 12.27 USGC ULSD ICE Brent 14.25 G3 ULSD WTI 23.88 Natural gas (Houston Ship Channel,…
  36. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 36
    Port Arthur and St. Charles Hydrocrackers Performing Better Than Expected 120 MBPD of combined new capacity successfully started end of 2012 and mid-2013 Designed to produce high-quality distillates from low-quality feedstocks and…
  37. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 37
    Port Arthur and St. Charles Hydrocrackers Performance Details Benefits Realized in Reported Results Trailing 4 Quarters mm, except /bbl amounts 4Q12 3Q14 Increase Gulf Coast Capture Rate 58.8% 63.2% 4.4% x Gulf Coast Indicator/bbl,…
  38. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 38
    Drop Down of Houston and St. Charles Terminal Services Business to VLP Operations Financing Crude oil, intermediates, and refined 671 million transaction closed on petroleum product terminaling services March 1, 2015 in Houston,…
  39. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 39
    Valeros GP Interest in VLP Nearing the High Splits Marginal Percentage Interest in Distributions Target Quarterly Distribution per Unit Unitholders GP Minimum quarterly 0.2125 98% 2% First target above 0.2125 up to 0.244375 98%…
  40. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 40
    Valero Is Currently Utilizing 82 Percent of Its Available Light Crude Capacity in North America MBPD McKee Crude Unit Expansion 25 MBPD additional capacity expected in 2H15 Distillate recovery improvements Houston Crude Topper 90…
  41. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 41
    Valero Leads Peers in Total Location-Advantaged Crude Capacity MBPD 1,948 1,731 Eastern Canada U.S. Gulf Coast 1,230 U.S. Midcontinent 443 129 VLO MPC PSX HFC TSO Source: Company 10-Ks and IR slides. Crude…
  42. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 42
    Expect Quebec City Refinery to Have Cost-Advantaged Access to 100% North American Crude in 2015 Quebec City Refinery Crude Slate 100% 80% Foreign 60% Imports 40% North American 20% 0% 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14…
  43. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 43
    U.S. Natural Gas Provides Opex and Feedstock Cost Advantages Our refining operations consume approximately 864,000 mmBtu/day of natural gas, split almost equally between operating expense and cost of goods sold Significant annual…
  44. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 44
    Capacity to Export Additional Product Export markets pull volume from Valeros U.S. Product Exports (MBPD) U.S., enabling high refinery 700 utilization and improved margins 600 Gasoline Diesel Supported by global refined 500…
  45. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 45
    Long-Term Macro Market Expectations Economic activity and total petroleum demand increases Transportation fuels demand grows Global Outlook Refining capacity growth slows after 2015; utilization stabilizes then expected to increase…
  46. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 46
    Estimated Crude Oil Transportation Costs Alberta to Eastern Canada Rail 11 to 12/bbl Rail 9/bbl Alberta to Bakken 1 to 2/bbl U.S. Ship Bakken 4 to USGC to Canada 5/bbl Foreign Ship 2/bbl to West Coast to USEC Rail 13 to…
  47. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 47
    Regional Indicator Margins Defined 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 40% Midcontinent…
  48. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 48
    World Refinery Capacity Growth New capacity additions expected in Asia and the Middle East Announced new capacity in Latin America likely to be smaller and start later than planned Capacity rationalization expected to continue in…
  49. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 49
    Capacity Rationalization in Atlantic Basin Marginal refiners continue to rationalize capacity Closures in the last few years have been focused in Japan, Australia, and Europe MPBD Annual Global CDU Capacity MBPD Cumulative Global…
  50. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 50
    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 Rome, Italy Total/Erg 88 2012 Bakersfield, CA Big West…
  51. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 51
    U.S. Refining Capacity Is Globally Competitive and Continues to Take Market Share U.S. flipped from importer to exporter on lower local product demand and higher refinery utilization, particularly in PADDS 2, 3, and 4, driven by…
  52. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 52
    Increase in U.S. Gasoline Exports 800 12 Month Moving Average, MBPD 700 Other Europe 600 Other Latin America 500 Mexico Canada 400 Latest 4 Wk avg estimate (Finished only) 300 200 100 0 2005 2006 2007 2008 2009 2010 2011…
  53. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 53
    Increase in U.S. Diesel Exports 1400 12 Month Moving Average, MBPD 1200 Other 1000 Europe Other Latin America 800 Mexico Canada 600 Latest 4 Wk avg estimate 400 200 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014…
  54. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 54
    U.S. Shifted to Net Exporter Net refined products exports increased from 335 MBPD in 2010 to 2,399 MBPD in 2015 Diesel net exports averaged 919 MBPD in 2014; 666 MBPD in 2015 (Jan-Mar) Gasoline net exports averaged 66 MBPD in 2014;…
  55. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 55
    U.S. Transport Indicators U.S. VMT Growth vs. Gasoline Demand Growth Airline Traffic Indicators U.S. Gasoline Demand Growth 3.0 90% 7.0% U.S. VMT Growth International Domestic Load Factor U.S. Gasoline Demand Growth 12MMA 5.0% U.S.…
  56. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 56
    U.S. Transport Indicators: Trucking ATA Seasonally Adj Truck Tonnage Index ATA Non-Seasonally Adj Truck Tonnage Index 140 145 Current Year Current Year 135 12-Mth Moving Avg 12-Mth Moving Avg 135 130 125 125 Index, 2000 = 100…
  57. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 57
    Mexico Statistics Crude Unit Throughput (MBPD) Crude Unit Utilization 1,400 90% 1,350 85% 1,300 80% 1,250 1,200 75% 1,150 70% 1,100 65% 1,050 1,000 60% 950 55% 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015…
  58. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 58
    Non-GAAP Reconciliations Reconciliation of VLO Ethanol Operating Income to EBITDA Ethanol (millions) 2Q09 4Q09 2010 2011 2012 2013 2014 1Q15 Cumulative Operating income 165 209 396 (47) 491 786 12 2,012 + Depreciation and…
  59. JUNE 2015 INVESTOR PRESENTATION – Valero Energy Corporation – slide 59
    Investor Relations Contacts For more information, please contact: John Locke Executive Director, Investor Relations 210-345-3077 john.lockevalero.com Karen Ngo Manager, Investor Relations 210-345-4574 karen.ngovalero.com 60

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