Valero Energy Today Worlds largest independent refiner 16 refineries 3 million barrels per day (BPD) of throughput capacity, with average capacity of 190,000 BPD (187,000 BPD excluding Aruba) Approximately 6,800 branded marketing…
Valeros Geographically Diverse Operations Capacities (000 bpd) Total Through Crude Nelson Refinery -put Oil Index Corpus Christi 325 205 20.6 Houston 160 90 15.1 Meraux 135 135 10.2 Port Arthur 310 290 12.7 St. Charles 270…
Valero in the Atlantic Basin 5
Recently Announced Retail Separation Board of directors has authorized management to pursue a separation of our retail business Reviewing several potential separation transactions including a tax-efficient distribution to…
Valeros U.S. Retail Segment Network U.S. Canada Total Owned 828 81% 290 37% 1,118 62% Leased land, own improvements 68 7% 114 15% 182 10% Leased land and improvements 131 13% 371 48% 502 28% Total 1,027 100% 775 100% 1,802…
Valeros Retail Segment Performance Valero Retail Segment EBITDA Number of Valero Retail Segment Sites (millions) 600 2,500 Canada Canada U.S. 500 U.S. 2,000 400 1,500 300 1,000 200 100 500 0 0 2005 2006 2007 2008 2009 2010…
VLO Well-Positioned to Benefit from Changing Market Trends Atlantic Basin refining closures reducing excess capacity U.S. competitively exporting into growing and undersupplied markets Expect abundant and growing U.S. shale oil…
Continued Global Demand Growth Important to Refining Margins Emerging markets are taking the lead in terms of global petroleum demand growth but refining is a global business and world growth impacts refiners in every market MMBPD…
World Refinery Capacity Growth Significant new global refining additions seen in the next several years Mainly new plants in Asia and the Middle East Some investment in Latin America New capacity announcements from Brazil and Mexico…
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…
Product Margins Responding to Atlantic Basin Closures With recent closures, Atlantic Basin product margins have increased from prior year levels Market focused on gasoline margin improvements, but more significant impact may be…
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. Refining Capacity Is Globally Competitive U.S. refiners in PADDs 2, 3, and 4 have higher utilization due to structural advantages of increasing access to discounted crude feedstocks and low-cost energy via natural gas PADD 1 and…
Rapid Growth in U.S. Crude Supply Shale oil production growth and Mid-Continent heavy-up projects are rapidly increasing domestic light, sweet crude supplies This has created a bottleneck of crude oil that has exceeded the capacity of…
Rapid Growth in Logistics to U.S. Gulf Coast Logistics capacity to move inland crude from the Mid-Continent and Texas to the U.S. Gulf Coast is expanding quickly to debottleneck the inland markets Bakken logistics capacity is…
Expect U.S. and Canadian Crude Supply to Provide Feedstock Cost Advantage Movements of inland crude to the U.S. Gulf Coast have caused Gulf Coast light/medium sweet crude imports to decline by about 1 MMBPD since 2010 Expect all Gulf…
LLS Discount to Brent Improves Gulf Coast Competitiveness 20.00 Brent 5-3-2 products crack, product prices set by Brent 16.00 12.00 8.00 LLS becomes another discounted crude Brent is the marginal 4.00 Atlantic Basin crude 0.00…
Valeros Ability to Run Discounted Light Crude Valero has increased its exposure to domestic light crude processing as additional volumes have become available Gulf Coast system including Memphis has the ability to add an additional…
Lower-Cost Natural Gas Provides Structural Advantage to U.S. Refiners Expect U.S. natural gas prices will remain low and disconnected from global oil and LNG prices for foreseeable future VLO refinery operations consume up to 600,000…
Distillates Have Higher Margins and Faster Growth Distillate (diesel, kero, jet fuel) margins are significantly higher than gasoline Distillate demand growth rate is much higher than gasoline Europe continues to be short diesel, but…
Valeros Key Economic Projects Capture the Natural Gas to Crude Oil Spread Estimated Annual Estimated Total Estimated Annual Estimated IRR2 EBITDA1 using 2011 Investment EBITDA Base Case1 using Base Prices (millions) Refinery Project…
Valeros Hydrocracker Projects Show Profits Under Various Price Sets millions Estimated Annual EBITDA Contribution 1,600 St. Charles Hydrocracker Project 1,400 Port Arthur Hydrocracker Project 1,200 1,000 800 600 400…
Valero Increasing Distillate Yields Valeros refining system distillate yields are expected to grow from 33% in 2010 to 39% in 2013 Primary driver for increase is the completion of hydrocracker projects in 2012 Recent acquisitions…
Improving Refinery Operations Our goal is to be a 1st-quartile refiner Valero Refinery Energy Efficiency 3rd Quartile Refining industry benchmark studies show our portfolio continues to 2nd improve Quartile Seven refineries…
Expect Large Decline in Capital Spending After Completion of Key Economic Growth Projects Valero Capital Spending Budget (millions) Total 3,575 Total 2,985 Total Total 1,860 2,000 to Strategic/ 2,265 2,500 Economic 1,340…
Managing Financial Strength and Growing Cash Yield Expect significant contributions of free cash flow Regular Dividend to EPS Payout Ratio from reduced capital spending and earnings from 20% major capital projects in 2013 15%…
Valeros Strategic Priorities Constant focus on safety, environmental, and regulatory compliance Maintain investment grade credit rating Continue improvement in refining portfolio performance to 1st quartile levels Complete major,…
We Believe Valero Is an Excellent Buy Today Seeking shareholder value creation via retail separation Well-positioned to benefit from changing market trends Atlantic Basin capacity closures have improved refining fundamentals…
Appendix 31
Made Excellent Ethanol Acquisitions Built position for average of only 35% of estimated replacement cost 2Q09: Acquired 7 plants with 780 million gallons per year of world-scale capacity in advantaged locations 1Q10: Added 3 plants…
Port Arthur Hydrocracker Project Investment Highlights Favorable economics driven by margin and Summary of Project Status and Economics1 volume gains Estimated mechanical completion date 3Q12 Main unit is 57,000 barrels/day (rolling…
St. Charles Hydrocracker Project Investment Highlights Favorable economics driven by margin Summary of Project Status and Economics1 and volume gains Estimated mechanical completion date 1Q13 Main unit is 60,000 barrels/day Estimated…
Montreal Pipeline Project Investment Highlights Summary of Project Status and Economics1 Favorable economics driven by Estimated completion date 4Q12 reducing transportation costs and Estimated total investment (mil.) 370 growing…
Diamond Green Diesel Joint Venture Investment Highlights Building a 9,300 BPD renewable diesel Summary of JV Status and Economics1 plant adjacent to Valeros St. Charles Estimated mechanical completion date 1Q13 refinery Estimated…
Project Price Set Assumptions Prices shown below are for illustrating a potential estimate for Valeros economic projects Price assumptions are based on a blend of recent market prices and Valeros price forecast Base Case 2008 2009…
Project Price Sensitivities Price sensitivities shown below are for illustrating a potential estimate for Valeros economic projects Price assumptions are based on a blend of recent market prices and Valeros price forecast Port St.…
Key Drivers for a 60,000 BPD Hydrocracker Key economic driver is the expected significant liquid-volume expansion of 20%, which primarily comes from the hydrogen saturation via the high- pressure, high-conversion design Designed to…
60,000 BPD Hydrocracker Model Estimates Under Various Price Sets Key Drivers and Prices 2008 Prices 2009 Prices 2010 Prices 2011 Prices 2Q12 Prices LLS /bbl 102.07 62.75 81.64 111.09 108.64 LLS HSVGO /bbl 2.03 -2.86 -2.72 -5.75 -10.70…
Keystone XL Pipeline Western Keystone XL Pipeline Gateway to Kitimat Presidential Permit Delay Enbridge working to TransCanada 1,661 mile pipeline that Trans expand Mountain to will bring 700,000 bpd of Canadian Vancouver…
U.S. Oil and Gas Supplies Increasing Rapidly Sources of Supply for U.S. Total Sources of Supply for U.S. MMBPD Petroleum Demand BCFD Natural Gas Demand 25 80 Other Other Canada 70 U.S. U.S. 20 60 50 15 40 10 30 20 5…
Global Refining Capacity Rationalization CDU Capacity CDU Capacity Closed Year Closed Year Location Owner (MBPD) Closed Location Owner (MBPD) Closed Perth Amboy, NJ Chevron 80 2008 Funshun, China PetroChina 70 2011 Bakersfield,CA Big…
Global Refining Capacity For Sale or Under Strategic Review CDU Capacity Location Owner (MBPD) Gothenburg, Sweden Shell 80 Kapolei, HI Chevron 54 Milford Haven, UK Murphy 108 Whitegate, Ireland Phillips 66 70 Mazeikai, Lithuania…
Low-Cost U.S. Natural Gas Provides Competitive Advantage U.S. natural gas trading at a significant discount to Brent crude oil price (on energy equivalent basis) Expect U.S. natural gas prices will remain low and disconnected from…
Gasoline Fundamentals USGC LLS Gasoline Crack (per bbl) U.S. Gasoline Demand (mmbpd) 9.9 30 9.4 8.9 10 8.4 -10 7.9 May Mar Apr Nov Feb Mar May Sep Aug Dec Oct Jan Jul Dec Apr…
Distillate Fundamentals 40 USGC LLS On-road Diesel Crack (per bbl) 5 U.S. Distillate Demand (mmbpd) 30 4.5 20 4 10 3.5 0 3 May May Mar Mar Dec Aug Dec Apr Jun Jul Aug Apr Jun Jul Jan Feb…
U.S. Transport Indicators: Trucking Indicators 49
U.S. Transport Indicators Ceridian Pulse of Commerce Index 102 100 98 96 94 92 90 88 86 84 82 Latest data May-12 80 2002 2000 2001 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Recessions…
Venezuelan Exports to the U.S. MBPD 400 Total Products 350 Gasoline and Gasoline Blending Components 300 Diesel 250 200 150 100 50 0 May-10 Sep-11 May-05 Sep-05 May-06 Sep-06 May-07 Sep-07 May-08…
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…
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 1494 MBPD in 2012 YTD Diesel net exports continue to rise significantly,…
U.S. Gasoline Exports by Destination Gasoline exports remain at strong levels due to the solid demand from Latin America, including Mexico MBPD 700 12 Month Moving Average 600 Other Europe 500 Other Latin America Mexico 400…
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 in 2012 Although the shutdown of U.S. East coast refineries will require…
U.S. Diesel Exports by Destination Diesel exports to Latin America continue to exceed exports to Europe, but over two- thirds of diesel export growth in 2011 was to Europe Latin America needs remain high on good demand growth and…
U.S. Diesel Imports by Source Diesel imports continue to fall in 2012 due to less volume from Latin America MBPD 450 12 Month Moving Average Other 400 Europe Other Latin America 350 Canada Latest 4 Wk avg estimate 300 250…
U.S. Crude and Natural Gas Production Tight Oil Supply Growth The new U.S. shale plays are located in places that should provide additional barrels into the Rockies and Gulf Coast - pressuring crude imports and lowering natural gas…
Ethanol and Retail Reconciliation of Operating Income to EBITDA Ethanol (millions) 2Q09 4Q09 2010 2011 1Q12 2Q12 Operating Income 165 209 396 9 5 + Depreciation and amortization expense 18 36 39 10 9 = EBITDA 183 245 435 19 14…
Most Crude Oil Discounts Improving /barrel Crude Oil Prices versus ICE Brent (a proxy for waterborne light sweet) 5 LLS 0 ANS -5 Mars -10 Maya -15 WTI -20 -25 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11…
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