Driven to Create Value Wolfe Research Oil & Gas Refiners Conference January 2016 2015 Tesoro Corporation. All Rights Reserved.
Tesoros Competitive Advantage The leading integrated refining, marketing and logistics company in our strategic footprint Driving significant business improvements and creating sustainable earnings growth Demonstrated track record…
Changes in Tesoros Business 2010 - 2015 Anacortes, WA Kenai, AK 120 MBD 72 MBD Mandan, ND 74 MBD Salt Lake City, UT 63 MBD Key Metrics 2010 2015E Martinez, CA 166 MBD EBITDA ( in millions) 551 3,9001 Enterprise Value 3.5…
Strategic Priorities Operational efficiency and effectiveness Safety and reliability Cost leadership System improvements Value Chain Optimization Financial discipline Value-driven growth High Performing Culture Enduring…
PADD V Shows Strong Rebound PADD V Supply Demand Balance 8% Vehicle Miles Traveled Oct 2014 - Sep 2015 6% Average Production1 Demand Exports MBD 4% Gasoline 1,592 1,573 - 2% Diesel 582 531 95 0% Jet 427 459 (21) Total 2,601…
Mid-Continent Continues as a Strong Market ( per barrel) 30 Crude Diffs vs Brent 10 ( per barrel) 25 LLS Mandan Index 0 20 SLC Index ANS (10) 15 (20) WTI 10 GC 3-2-1 vs LLS (30) 5 WCS (40) 0 (50) 2010 2011 2012 2013…
Successfully Delivered Growth During 2015 2015 commitment from 2014 Investor and Analyst Day ( in millions) 2015 2015 2015E Target YTD1 Deliver West Coast Improvements 95 - 125 130 190 Capture Margin Improvements 130 - 170 120…
Clear Plan for Improvements in 2016 ( in millions) 2016E Refining1 200 - 250 Logistics1 175 - 200 Marketing 25 - 50 Business Improvements 400 - 500 Higher Utilization and Capture2 500 - 600 Total Improvements 900 - 1,100 Annual…
Growth in Improvements Beyond 2016 ( in millions) 2017E 2018E Refining1 100 - 200 Logistics1 250 - 275 Marketing 325 - 450 New Business Investments 50 - 100 Total 725 - 1,025 Annual Improvements 725 1,025 400 500 700 560…
Highly Competitive Refining System Regionally advantaged crude oil access System-wide value chain optimization resulting in strong gross margin capture Operational excellence enabling world class asset availability of 97% Business…
Driving High Reliability and Utilization Operational Availability Sustaining World Class availability via mechanical 97% 97% 97% 98% 97% 98% integrity programs and reliability investments 2015 YTD1 Target High Utilization to meet…
Maximizing Availability Through Investment Turnaround Spend Sustaining Capital Spend ( in millions) ( in millions) 300 530 270 260 460 400 220 320 2015E 2016E 2017E 2018E 2015E 2016E 2017E 2018E Disciplined investment…
Business Improvements Bolstering Earnings Growth Targeting 200 million of annual improvement Distribution Flexibility & Yields Cost Management Optimization Driving 150 million of operating expense savings relative to…
Strategic Investments for Distinctive Value Creating advantage through integration Los Angeles Refinery Integration and Compliance Project Changing the West Coast crude oil supply dynamics Vancouver Energy Project Capturing higher…
Creating Competitive Advantage at the Los Angeles Refinery Los Angeles Integration and Compliance Project Completes full integration of Los Angeles Refinery Provides 30 to 40 MBD of gasoline and distillate yield flexibility Improves…
Supplying Advantaged Crude Oil to the West Coast Vancouver Energy Project Joint venture with Savage Companies Up to 360 MBD Rail-to-Marine Terminal Most efficient route to West Coast for Bakken crude oil Significant infrastructure…
Supplying Mixed Xylene to Asia West Coast Mixed Xylene Project Upgrading gasoline components Advantaged to mixed xylene Feedstocks Large and growing market in Asia Advantaged ASIA Logistics Transportation cost advantage…
Optimize Gasoline Production at Anacortes Isomerization Project at Anacortes Refinery Reduces octane production costs Efficiently meets Tier III sulfur requirements Increases Mixed Xylenes production Estimated Project Details…
Tesoro Logistics Competitive Advantage Leading provider of logistics services to oil and gas producers and refining and marketing companies in strategic footprint Tesoros strategy supports integration and drives high growth Clear…
Asset Footprint Provides Unique Platform for Growth Anacortes, WA Kenai, AK Mandan, ND Salt Lake City, UT Key Metrics Martinez, CA Crude oil, refined product and 3,500+ miles Natural gas pipelines Natural gas throughput…
Strategic Framework to Drive Growth Focus on Stable, Provide full-service logistics offering Fee-Based Business Minimal commodity price exposure Enhance operational efficiency and maximize asset utilization Optimize Existing Capture…
Tesoro Marketing Overview We market fuel under premium Pacific Northwest brands Site Count = 150 Anacortes, WA and value brands Mandan, ND Salt Lake City, UT Martinez, CA Distinctive multi-brand portfolio provides…
Maximizing Integrated Value through Marketing Company Owned Provides a secure and Retail Station ratable offtake Enables refineries to Franchisee optimize production Owned Retail Customer Facing schedules, run economically at…
Driving Marketing to 1 Billion of EBITDA by 2018 Drive 150 - 200 million of organic growth and business improvements EBITDA 2016-2018 ( in millions) Implement store improvements 200 - 300 1,000 Increase marketing margin by…
Financial Strategic Priorities Business EBITDA growth of 48% CAGR from 2010-2015E Improvements Drive EBITDA and Generated 5.1 billion of free cash flow in 2010-2015E Cash Flow Expect to generate 3.9 billion of free cash flow in…
Cash Generation and Investment Outlook Cumulative Cash Generation Outlook ( in millions) Cumulative Cash Generation 4,750 3.9 billion of free cash flow expected from 2016 20181 2,850 850 million from asset sales to TLLP 1,400…
Capital Spending Outlook Tesoro Capital Spending1 ( in millions) 1,230 990 Income 695 Regulatory Maintenance 2016E 2017E 2018E 30 Tesoro 1) Excludes self-funded TLLP capital expenditures
Maintaining a Strong Balance Sheet Target TSO debt to capitalization1 below 30% and TLLP leverage of 3 4 times Average cost of debt at Tesoro is 4.9% with a duration of 8.2 years2 Average cost of debt at TLLP is 5.4% with a duration…
Non-GAAP Financial Measures Projected EBITDA (In millions) Unaudited EBITDA Reconciliation (In millions) Unaudited Reconciliation 2010 2015E Net earnings attributable to Tesoro Corp (29) Projected net earnings attributable to Tesoro…
Non-GAAP Financial Measures (In millions) Unaudited Projected Annual EBITDA LA Refinery Integration and Compliance Project Vancouver Energy Mixed Xylene Isomerization Other Projects Total Projected net earnings 52 59 56 22 5 194 Add…
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