Hf Sinclair Corporation · NYSE:DINO
Hf Sinclair — Holly — Investor Presentation (December 2008)
26 slides from Hf Sinclair's investor presentation, Dec 2, 2008
Slide 1: Holly Corporation Winter 2008 Update
Holly Corporation Winter 2008 Update
Slide 2: Disclosure Statement
Disclosure Statement Statements made during the course of this presentation that are not historical facts are "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward- looking statements are inherently uncertain and necessarily involve ris
Slide 3: Holly Operations & Growth Advantages
Holly Operations & Growth Advantages Pure play independent refiner Over 40 years of refining experience Assets positioned to serve historically high growth & high margin markets Track record of superior returns on capital among peers Strong balance sheet & cash flow generation for capital investment
Slide 4: Existing Asset Location / Business Footprint
Existing Asset Location / Business Footprint Holly Corporation: Holly's refineries operate in historically high margin & high growth Southwest & Rockies markets 116,000 bpsd of refining capacity Refineries directly connected to Domestic or Canadian crude trading hubs Holly Energy Partners: Over 1,70
Slide 5: Strong Financial Position vs. Peer Group: Return on Invested Capital
Strong Financial Position vs. Peer Group 9 Return on Invested Capital Return on Invested Capital 2003 18% 2004 26% 2005 45% 2006 63% 2007 63% High return on invested capital Strong cash flow generation
Slide 6: Strong Financial Position vs. Peer Group: Debt / Equity
Strong Financial Position vs. Peer Group1 11 Debt / Equity Debt / Equity 2003 6% 2004 3% 2005 0% 2006 0% 2007 0% No long term debt Strong balance sheet 1Excludes debt of Holly Energy Partners, which is consolidated on Holly's balance sheet
Slide 7: Capital Spending Plan: 2007-2009
Capital Spending Plan: 2007-2009 - - Elements of both Offense & Defense: Expanding refining capacity 18% by 2009 - --from 111,000 bpsd to 131,000 bpsd Increase flexibility of processing cost-advantaged crudes1 - --from 5,000 bpsd to 55,000 bpsd All projects to take advantage of historically growing
Slide 8: Navajo Refinery: Expansion and Feedstock Flexibility
Navajo Refinery: --Expansion and Feedstock Flexibility Phase I: Expand crude capacity to approximately 100,000 bpsd (Q1 '09) Revamp Lovington crude & vacuum unit Install new 15,000 bpsd gas oil hydrocracker (40% conversion) Install new 28 mmscfd hydrogen plant Expand sulfur recovery capacity Phase I
Slide 9: Woods Cross Refinery: Expansion and Feedstock Flexibility
Woods Cross Refinery: --Expansion and Feedstock Flexibility Expand refinery to 31,000 bpsd Increase amount of Canadian / Black Wax Crudes to 50% of crude capacity Install new 15,000 bpsd gas oil hydrocracker (40% conversion) New Black Wax desalter Expand sulfur recovery capacity Black Wax crude unlo
Slide 10: UNEV Pipeline: Salt Lake City to Las Vegas
UNEV Pipeline: --Salt Lake City to Las Vegas Build 400 mile 12" pipeline Initial capacity approximately 62,000 bpd Expandable to approximately 118,000 bpd (w/ additional pump stations) 2 Terminal locations: North Las Vegas, NV and Cedar City, UT Holly entity owns 75% of project with Sinclair owning
Slide 11: Projected Capital Expenditures by Year
Projected Capital Expenditures by Year Capital Projects: 2007 2008YTD1 2008Q4 2009 Total NRC expansion and feedstock flexibility 59 96 30 94 279 Phase I - Expansion 52 71 20 30 173 Phase II - Feedstock Flexibility 7 25 5 54 91 Heavy oil tankage & loading facility 0 0 5 10 15 WX expansion and feedsto
Slide 12: Liquidity to Complete Capital Programs
Liquidity to Complete Capital Programs Remaining Capital Required under Current Program (9/30/08-12/31/09): $460 million Cash on Balance Sheet @ 9/30/081 $229 million Undrawn Availability under Credit Facility $173 million Plus: Cash generated from operations over the next 12-18 months 1Excludes HEP
Slide 13: Expanded Footprint in Southwest / Rocky Mountain States
Expanded Footprint in Southwest / Rocky Mountain States Current: 116,000 bpsd of refining capacity Operate in the historically high margin & high growth Southwest & Rockies markets Can process approx. 80,000 bpsd of sour crude feedstock Can process approx. 5,000 bpsd of price-advantaged crude feedst
Slide 14: NRC Refining Margins
NRC Refining Margins Red bars represent '03-'07 5-yr. high & low gross margin range. Median of that range is depicted in blue. NRC '08 GM - black solid line GC 5-Yr. Avg 3-2-1 margin- maroon line
Slide 15: Woods Cross Refining Margins
Woods Cross Refining Margins Red bars represent '03-'07 5-yr. high & low gross margin range. Median of that range is depicted in blue. WX '08 GM - black solid line GC 5-Yr. Avg 3-2-1 margin- maroon line
Slide 16: Holly Historical EBITDA & Associated Gross Margin per bbl
Gross Margin: $7.23/BBL $9.20/BBL $12.62/BBL $15.78/BBL $16.74/BBL 31 Holly Historical EBITDA (in millions) & Associated Gross Margin per bbl *HEP formed in July 2004
Slide 17: Estimated Effects of Capital Projects: Expansion & Gross Margins
Estimated Effects of Capital Projects at Holly's Refineries Illustrative computations of impact of expansion & gross margins 33 Gross Margin/bbl Consolidated Navajo Woods Cross 2003 $7.23 $7.43 $6.10 2004 $9.20 $10.16 $6.00 2005 $12.62 $13.61 $9.62 2006 $15.78 $15.37 $17.10 2007 $16.74 $15.58 $20.69
Slide 18: Estimated Effects of Capital Projects: Crude Mix Changes
35 Estimated Effects of Capital Projects at Holly's Refineries Illustrative computations of impact of crude mix changes Every +/- $1 change in net feedstock costs equals $3.65 million Every +/- $1 change in net feedstock costs equals $14.6 million All dollar values are for a full year impact and ass
Slide 19: Cash Flow at Various EBITDA Levels - 2009
Cash Flow at Various EBITDA Levels -- 2009 EBITDA $200 $300 $400 $500 $600 Estimated Cash Income Tax <41> <77> <112> <148> <184> CAPEX (1) <350> <350> <350> <350> <350> Free Cash Flow < $191> <$127> <$62> $2 $66 (in millions) (1) Currently estimated total for anticipated sustaining capital projects
Slide 20: Holly Operations & Growth Advantages
Holly Operations & Growth Advantages Pure play independent refiner Over 40 years of refining experience Assets positioned to serve historically high growth & high margin markets Track record of superior returns on capital among peers Strong balance sheet & cash flow generation for capital investment
Slide 21: Holly Corporation contact details
Holly Corporation 100 Crescent Court, Suite 1600 Dallas, Texas 75201 (214) 871-3555 Bruce Shaw, Senior VP-Chief Financial Officer M. Neale Hickerson, VP-Investor Relations www.hollycorp.com
Slide 22: Appendix
Appendix
Slide 23: Definitions
Definitions BPD: the number of barrels per calendar day of crude oil or petroleum products. BPSD: the number of barrels per stream day of crude oil or petroleum products. EBITDA: Earnings before interest, taxes, depreciation and amortization, which we refer to as EBITDA, is calculated as net income
Slide 24: Tax Benefits
Tax Benefits American Jobs Creation Act of 2004: (October 2004) Created tax incentives for small refiners to produce ULSD Provides immediate deduction of 75% of certain capital costs Provides a tax credit based on ULSD production up to 25% of these costs Domestic Manufacturers Tax Deduction Provided
Slide 25: Sulfur Credits Benefit
Sulfur Credits Benefit Value realized by Holly: In 2006, Holly sold approximately 100,000 credits for approximately $16 million In 2007, Holly sold approximately 150,000 credits for approximately $23 million Credit Generation: Compliance with Low Sulfur gasoline for small refiners, including Holly,
Slide 26: Common Stock Repurchase Programs (2005 - 2008)
Common Stock Repurchase Programs (2005 - 2008) Repurchases in 2008 Approximately 3.2 million shares repurchased for about $137.1 MM Weighted average price of $42.48 Repurchases 2005 - 2008 (as of 9/30/08) Repurchased total of approx 16.8 million shares for about $655 MM Represents approximately 26%