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Simmons Energy Conference – Tesoro Corporation

Tesoro Corporation · Feb 27, 2014 · 30 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. Simmons Energy Conference – Tesoro Corporation – slide 1
    Transformation through Distinctive Performance Simmons Energy Conference February 27, 2014
  2. Simmons Energy Conference – Tesoro Corporation – slide 2
    Tesoro Key Metrics 2010 2013 Enterprise Value ( billions) 3.5 10.5 Kenai, AK Market Cap ( billions) 2.0 7.7 72 MBD Refining Capacity (MBD) 665 850 Anacortes, WA Refining Complexity 9.8 11.5 120 MBD Branded Retail Stations 880 2,264…
  3. Simmons Energy Conference – Tesoro Corporation – slide 3
    Tesoro Logistics LP Key Metrics Kenai Enterprise Value ( billions) 4.0 Anacortes Market Cap ( billions) 2.9 Crude Oil and Refined 1,570 miles Product Pipelines Mandan High Plains Pipeline 90+ MBD Throughput Salt Lake City High…
  4. Simmons Energy Conference – Tesoro Corporation – slide 4
    Market Outlook Overview Key Drivers Tesoros View Global Economic Outlook Moderate growth U.S. Economic Outlook 2 2.5% GDP growth Global Refining Capacity Capacity exceeds demand U.S. Refining Utilization High due to low feedstock…
  5. Simmons Energy Conference – Tesoro Corporation – slide 5
    PADD V Fundamentals Gasoline demand expected to 1,600 grow 0 to 0.5% annually through PADD V Gasoline Demand MBD 2016 1,550 Diesel demand expected to grow 1,500 1.0% annually 1,450 Net clean product exports 2008 2010 2012 2014F…
  6. Simmons Energy Conference – Tesoro Corporation – slide 6
    Keys to Distinction on the West Coast Operating cost advantage Flexible yield structure Access to costadvantaged crude oil Integrated logistics infrastructure Secure and ratable refinery offtake Costadvantaged regulatory…
  7. Simmons Energy Conference – Tesoro Corporation – slide 7
    Strategic Priorities Operational efficiency and effectiveness Safety and reliability Cost leadership System improvements Commercial excellence Financial discipline Valuedriven growth High performing culture Enduring…
  8. Simmons Energy Conference – Tesoro Corporation – slide 8
    Execution of Strategic Priorities Distinctive Performance: 2014 and 2015 Deliver California synergies Enhance gross margin Improve the base Grow logistics Maintain financial discipline Targeting 370 to 430 million of EBITDA…
  9. Simmons Energy Conference – Tesoro Corporation – slide 9
    Distinctive Performance Objectives Distinctive Performance Objectives million 2014 2015 Deliver California Synergies 160 180 260 300 Enhance gross margin 140 160 250 290 Improve the base 70 90 80 120 Annual EBITDA Improvement1 370…
  10. Simmons Energy Conference – Tesoro Corporation – slide 10
    California Synergy EBITDA 430490 Annual EBITDA millions 375415 295335 195215 225 250 175 110 2014E 2015E 2016E 2017E Acquistion Model Current View Feedstock Advantage Production Optimization Logistics Optimization…
  11. Simmons Energy Conference – Tesoro Corporation – slide 11
    California Synergy Capital Expenditures Los Angeles Refinery Integration Project Optimizes processing capability Provides 3040 MBD product flexibility Net Capital millions Reduces CO2 emission 500,000 tons 180 160 per year…
  12. Simmons Energy Conference – Tesoro Corporation – slide 12
    Tesoros Advantaged Feedstock Opportunity Opportunities by Refinery Kenai Currently up to 25% Cook Inlet 72 MBD Potentially up to 67% Cook Inlet and Bakken Martinez 120 MBD Currently up to 45% California Heavy and 70% advantaged…
  13. Simmons Energy Conference – Tesoro Corporation – slide 13
    Crude Oil Production Growth Key Tesoro Markets Canadian 5,300 Cook Inlet 2,750 3,675 MBD 25 13 15 2008 2013E 2020E 2008 2013E 2020E Bakken 1,250 900 180 2008 2013E 2020E Niobrara/Uinta Total in Key 225 Markets 65…
  14. Simmons Energy Conference – Tesoro Corporation – slide 14
    Rail Costs to Clear Bakken Bakken Bakken Crude Oil Supply and Logistics MBD 2013 2014E 2015E Crude Oil Production1 865 1,000 1,200 Pipeline Export Capacity 635 685 685 Rail Export Capacity 865 1,015 1,015 West Coast…
  15. Simmons Energy Conference – Tesoro Corporation – slide 15
    Anacortes Yield Comparison Crude Oil Yields ANS Bakken 27% 34% Gasoline 26% 34% Distillate 47% Gas Oil and Residual Oil 32% Bakken crude oil yields 14% to 16% more gasoline and distillate than ANS 16
  16. Simmons Energy Conference – Tesoro Corporation – slide 16
    Port of Vancouver Up to 300 MBD RailtoMarine Terminal Joint venture with Savage Companies Port of Vancouver advantages Flexibility to deliver to all West Coast refineries Competitive with direct rail cost to California Existing…
  17. Simmons Energy Conference – Tesoro Corporation – slide 17
    West Coast Refining System Opportunity Tesoro Consolidated Tesoro Crude Oil Throughput West Coast Index 11% Foreign Heavy 12% 19% 22% Foreign Light 30% ANS 59% 12% 17% California 19% 17% WTI1 21% 38% 15% 8% 3Q…
  18. Simmons Energy Conference – Tesoro Corporation – slide 18
    Marketing Brands Deploy a premium and value branding strategy within each region New brands allow for site optimization and conversion Leverage Shell, Exxon and Mobil premium brand value to improve marketing channels…
  19. Simmons Energy Conference – Tesoro Corporation – slide 19
    Solomon Based Cost Reductions Total Operating Expense Gap (Nonenergy)1 /bbl 2010 2011 2012 California 1.70 1.10 0.85 Pacific Northwest NA 0.05 0.30 MidContinent 0.30 0.15 1.10 Weighted Average 1.15 0.55 0.75 Captured cost…
  20. Simmons Energy Conference – Tesoro Corporation – slide 20
    TLLP Strategic Drivers Focus on Stable, Feebased committed businesses FeeBased Business Maintain stable cash flow Optimize Existing Increase thirdparty volumes Asset Base Consolidate Tesoro business into TLLP terminals Pursue…
  21. Simmons Energy Conference – Tesoro Corporation – slide 21
    TLLP Value Proposition to Tesoro millions TLLP EBITDA Tesoros Implied Value of TLLP Ownership1 366 2,425 GP 1,375 Holdings 156 750 77 LP Units 2012 3 2013 3 2015E 2 2012 2013 2015E 2 Implied value per 5.50 10.47…
  22. Simmons Energy Conference – Tesoro Corporation – slide 22
    Financial Priorities Maintain a minimum cash balance of 600 to 800 million Target TSO debt to capitalization1 below 30% Solid Operating Results Target TLLP debt at 3x to 4x EBITDA Strategic Strong Growth Return Excess Cash…
  23. Simmons Energy Conference – Tesoro Corporation – slide 23
    Appropriate Leverage for Growth millions TSO1 TLLP1 Consolidated Total Debt 1,665 1,164 2,829 Total Equity 4,302 1,1833 5,485 Debt to Total Capitalization 28% 50% 34% Total Debt to EBITDA2 0.8x 4.1x 1.4x Tesoro leverage in…
  24. Simmons Energy Conference – Tesoro Corporation – slide 24
    Summary Capital Spending Tesoro Capital Spending1 in millions 790 770 Summary Capital Expenditures 670 millions 2013 2014E 2015E 2016E Income Maintenance 182 220 245 255 479 Synergy Regulatory 81 190 245 200 Synergy2 0 65 180…
  25. Simmons Energy Conference – Tesoro Corporation – slide 25
    TLLP Capital Spending TLLP plans to spend about Tesoro Logistics Capital Spend millions 100 million per year on income projects 160 160 Typical project return of 140 1525% Pursing opportunities to 79 Income expand gathering…
  26. Simmons Energy Conference – Tesoro Corporation – slide 26
    Delivering Free Cash Flow Expect to generate approximately Free Cash Flow 1 3.0 billion in free cash flow over in billions next three years 1.1 1.0 0.9 Before potential 1.5 billion of further logistics asset sales to TLLP…
  27. Simmons Energy Conference – Tesoro Corporation – slide 27
    Delivering Shareholder Value California Synergies Maintain Financial Enhance Gross Margin Discipline Transformation through Distinctive Performance Grow Logistics Improve the Base 28
  28. Simmons Energy Conference – Tesoro Corporation – slide 28
    NonGAAP Financial Measures EBITDA represents earnings before interest and financing costs, net, interest income, income taxes, and depreciation and amortization expense. We present EBITDA because we believe some investors and analysts…
  29. Simmons Energy Conference – Tesoro Corporation – slide 29
    NonGAAP Financial Measures (In millions) Unaudited Gross Margin Capture Improvements EBITDA 2014E 2015E Projected net earnings 88 163 Add income tax expense 51 96 Add depreciation and amortization expense 11 11 (1) EBITDA 150…
  30. Simmons Energy Conference – Tesoro Corporation – slide 30
    NonGAAP Financial Measures (2) (In millions) Unaudited TLLP EBITDA December 31, 2012 Tesoro Logistics LP Total Tesoro Logistics Predecessor (Partnership) LP Net earnings 57 (1) 56 Add interest and financing costs, net 9 0 9…

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