Valero Energy Corporation · NYSE:VLO
Valero Energy — UBS Global Oil & Gas Conference 2007
15 slides from Valero Energy's conference presentation, May 22, 2007
Slide 1: UBS Global Oil & Gas Conference
UBS Global Oil & Gas Conference May 22, 2007 Eric Fisher Vice President - Investor and Corporate Communications
Slide 2: 2007 Off to a Great Start
2007 Off to a Great Start Record first-quarter earnings of $1.86 per share Gasoline and diesel margins, better than last year Futures market indicates 2007 likely to be better than 2006 Executing initiatives to increase shareholder value $4.2 billon of shares repurchased YTD
Slide 3: Strong Refining Margins
Strong Refining Margins 5-Yr Avg 2007 2006 High Low 1/1/2007 5.15 4.69 6.33 7.12 2.87 2/1/2007 4.82 8.7 3.11 8.42 1.98 3/1/2007 8.88 17.21 14.55 14.55 5.64 4/1/2007 11.9 27.8 23.6 23.6 5.77 5/1/2007 10.26 36.24 16.97 16.97 4.1 6/1/2007 9.56 19.4 19.4 4.09 7/1/2007 10.63 22.14 22.14 4.83 8/1/2007 9.2
Slide 4: Gasoline Fundamentals Bullish Factors Continue
Gasoline Fundamentals Bullish Factors Continue Demand at high levels YTD growth at 1.7% over 2006 Strong worldwide economies High global demand for gasoline and blending components 5-Yr Avg 2007 2006 High Low 1/6/2006 8.886 9.292 9.221 9.221 8.665 1/13/2006 8.773 9.184 9.104 9.104 8.562 1/20/2006 8.
Slide 5: Gasoline Fundamentals Bullish Factors Continue
Gasoline Fundamentals Bullish Factors Continue 5-Yr Avg 2007 2006 High Low 1/6/2006 23.78 22.95 22.64 24.78 22.64 1/13/2006 24.29 23.6 23.25 25.17 23.25 1/20/2006 24.53 24.19 23.87 25.52 23.87 1/27/2006 24.87 24.71 24.67 26.36 24.26 2/3/2006 25 25.04 25.14 26.38 23.97 2/10/2006 25.14 24.8 25.22 26.7
Slide 6: Distillate Fundamentals Strong Outlook for Diesel
Distillate Fundamentals Strong Outlook for Diesel 5-Yr Avg 2007 2006 1/6/2006 2.792328571 3.377535714 2.967928571 1/13/2006 2.734207143 3.285392857 2.927357143 1/20/2006 2.671492857 3.160214286 2.882607143 1/27/2006 2.7159 3.110071429 3.0065 2/3/2006 2.785028571 3.171964286 3.046 2/10/2006 2.80625 3
Slide 7: Industry Trends Constructive for Refining Margins
Industry Trends Constructive for Refining Margins Industry margins to stay higher for longer Result World demand growth continues 2007 estimates 1.6 million barrels per day increase (1.9% growth) Industry refinery expansions and new construction costing much more and taking much longer Since 2004, p
Slide 8: Valero's Advantages
Valero's Advantages Aruba Throughput capacities in thousand barrels per day; Excludes 165,000 bpd Lima, OH refinery 17 Refineries Across Four Key Regions High-complexity system and leader in conversion capacity Enables us to convert more low- quality, discounted feedstocks into high-quality products
Slide 9: Strategic Focus Has Shifted
Strategic Focus Has Shifted GOAL - Become a better positioned, better performing, and more valuable company for the long-term Aggressive acquisition strategy was the right call over the past decade Acquisition market has changed Asset values have risen relative to our valuation Easy bargains are gon
Slide 10: Valero's Key Initiatives
Valero's Key Initiatives Evaluating all capital projects in light of higher costs and changing markets Removing or reducing scope on some projects Focusing on value-added, organic growth projects at flagship and niche refineries, commercial ventures to increase margins and system flexibility Targeti
Slide 11: Balanced Approach to Investing Cash
Balanced Approach to Investing Cash Capital expenditures - maintaining $3.5 billion budget for 2007 Dividends - increased twice in 2006 and by 50% already in 2007 Goal is to pay dividends in-line with peer group Stock buybacks Board approved additional $4 billion share repurchase authorization - tot
Slide 12: Capital Expenditures Details
Capital Expenditures Details 2006 2007E Regulatory 585 410 Turnarounds 570 425 Sustaining/Other 685 1100 Tier II 990 385 Strategic 920 1180 Strategic Tier II Sustaining/ Other Turnarounds Regulatory $3,750 $3,500 millions Regulatory and Tier II capital spending drops by $780 million from 2006 actual
Slide 13: 2007 Major Strategic Projects
2007 Major Strategic Projects Evaluating large hydrocracker and expansion projects at St. Charles and Port Arthur Planning bottoms-upgrading project at Jean Gaulin (Quebec) refinery Refinery Project Start Up Total Cost1 ($mm) Annual EBITDA ($mm) IRR1 Port Arthur Crude Expansion 1Q $157 $90 40% Houst
Slide 14: Map of Valero Refineries
Map of Valero Refineries Valero Marketing Presence Quebec, Canada 215,000 bpd capacity Three Rivers, Texas 100,000 bpd capacity Corpus Christi, Texas 340,000 bpd capacity Wilmington, California 135,000 bpd capacity Benicia, California 170,000 bpd capacity McKee, Texas 170,000 bpd capacity Krotz Spri
Slide 15: Safe Harbor Statement
Safe Harbor Statement Statements contained in this presentation that state the Company's or management's expectations or predictions of the future are forward-looking statements intended to be covered by the safe harbor provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934