Hf Sinclair Corporation · NYSE:DINO
Hf Sinclair — HollyFrontier — Investor Presentation (January 2014)
33 slides from Hf Sinclair's investor presentation, Jan 6, 2014
Slide 1: Investor Presentation January 2014
Investor Presentation January 2014
Slide 2: Forward-looking statements
ae HOLLYFRONTIER i Seniesa a _ pies Corpo! 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 Leases Reform Act of 1995. Forward-looking statements are inherently uncertain and necess
Slide 3: Our Mission
OUR MISSION OUR MISSION IS troleum refi ‘sustainable, profitable growth. WE SEEK TO ACCOMPLISH THIS BY: Operating rable and enwironmentaly sponsible manaet © ettcienty operating our = ottering © Growing both organically and tough strategic acquisitions Y WE PUT HEALTH AND SAFETY FIRST. ENVIRONMENTAL
Slide 4: HollyFrontier Investment Highlights
HollyFrontier Investment Highlights 4 Pure play competitive refinery 5 refineries with 443,000 barrels per day refining capacity Attractive niche product markets with advantaged crude supply Rocky Mountains, Southwest and Mid-Continent Strong investment track record with future growth focu
Slide 5: Footprint of HollyFrontier and Holly Energy Partners
Footprint of HollyFrontier and Holly Energy Partners Collaboration with HEP provides strategic growth opportunities in logistics and marketing operations 5
Slide 6: Proximity to Growing North American Crude Production
Proximity to Growing North American Crude Production Refineries are well-positioned for exposure to the growing supply of lower cost domestic and Canadian crude oil 6 Sources: Citi, Deutsche Bank, Goldman Sachs, Macquarie, Simmons & Co, Canadian Association of Petroleum Producers, Turner, Mason & Co
Slide 7: Advantaged Crude Slate
*Data from publicly available financial statements. 2013 Crude Slate data through 9/30/2013 **Source: Bloomberg 7 $(40) $(35) $(30) $(25) $(20) $(15) $(10) $(5) $- $5 1/1 1 3/1 1 5/1 1 7/1 1 9/1 1 1 1 /1 1 1/1 2 3/1 2 5/1 2 7/1 2 9/1 2 1 1 /1 2 1/1 3 3/1 3 5/1 3 7/1 3 9/1 3 1 1 /1 3 WTI/Brent WCS/WT
Slide 8: Crude Price Sensitivity
Crude Price Sensitivity 8 All HFC purchased barrels are at or below WTI price Run approximately 80,000 bpd of WCS Run approximately 90,000 bpd of WTS Sensitivity determined from WTI, WTS, and WCS crude inputs multiplied by annualized crude capacity for HFC and adjusted for approximate tax expens
Slide 9: Focus on Safe and Reliable Operations
Focus on Safe and Reliable Operations 9 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 2011* 2012 2013** Employees Contractors Personal Safety Refinery Reliability Equivalent Distillation Capacity Process Availability *Data from 2H2011 following the Holly and Frontier merger **Data through 3Q2013 Source: HFC A
Slide 10: Investment & Acquisition Strategy
10 Investment & Acquisition Strategy • Strong track record of buying the right assets at the right time • Woods Cross, El Dorado, and Tulsa refineries all purchased at industry lows on a per barrel basis • High hurdle rate on investments and acquisitions • Target AT LEAST 2x our Cost of Capital • Fo
Slide 11: Strategic Investment & Acquisition: Woods Cross Expansion
11 Strategic Investment & Acquisition Woods Cross Expansion Woods Cross Expansion: Phase 1 • Expansion of total capacity from 31,000 to 45,000 barrels per day • Includes relocation/revamp of FCC and polymerization units from Bloomfield, NM refinery • Supported by a supply agreement with Newfield for
Slide 12: Holly Energy Partners Crude Gathering Expansion
12 Expansion Project Improves • 800 miles of pipeline in SE New Mexico • Increased delivery capacity of up to 100,000 bpd • Additional delivery capacity to Navajo Refinery • Connections to major clearing points • Centurion to Cushing • Provides new connection via Bisti to Midland/Crane • Expanded ga
Slide 13: Capital Expenditure Overview
Capital Expenditure Overview *Our expected 2013 capital expenditure is between $400-$450 million; we expect 2014 capital expenditures to total approximately $400 million Legacy HOC & FTO capital expenditures combined for periods prior to the 2011 merger. 2011 capital expenditure calculated using 201
Slide 14: Strong Balance Sheet & Cash Returns
Strong Balance Sheet & Cash Returns 14 $2.0 billion cash on balance as of 9/30/13 $190 million outstanding debt excludes non-recourse HEP debt $287 million 9.875% notes called in June 2013 Total debt to capital ratio 3% as of 9/30/13* As of 9/30/13, approximately $332 million remaining i
Slide 15: Dividend Returns to Shareholders
Dividend Returns to Shareholders *Dividends are split adjusted reflecting HFC’s two-for-one stock split announced August 3, 2011. **Data from public filings and press releases. As of 12/31/2013 NYSE closing prices. See page 32 for calculations 15 Increased regular dividend 5 times since the merger
Slide 16: Best In Class Returns on Capital Employed
Best In Class Returns on Capital Employed Pro Forma HollyFrontier Returns on Invested Capital (Average 2008-2012)* 5-year average ROIC calculated by taking the average of ROIC’s for the years 2008-2012. ROIC calculated as net income divided by the sum of total debt and total equity. For HFC, legacy
Slide 17: Strong Financial Metrics vs Peers
Strong Financial Metrics vs Peers Net Income per Barrel of Crude Capacity HFC earnings per bbl strongest in peer sector (2008 – 2012) HFC earnings calculated by adding legacy HOC plus FTO earnings for periods prior to the merger. *MPC & PSX data based on 4-year averages See page 32 for calculations.
Slide 18: Business not Built on WTI/Brent Spread
Business not Built on WTI/Brent Spread Between 2001-2010, WTI traded on average at a $1.00 PREMIUM to Brent Between 2001-2010: Average ROIC 22% Average NI/BBL $2.69 -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 ROIC Source: Bloomberg HFC financials c
Slide 19: Holly Energy Partners Investment Highlights
Holly Energy Partners Investment Highlights 19 Well positioned assets that serve high growth markets Revenues are 100% fee based with no commodity ownership risk. Long-term contracts support cash flow stability HEP benefits from strong sponsor relationship with HollyFrontier Successful exe
Slide 20: Holly Energy Partners Partnership Growth
Holly Energy Partners Partnership Growth 20 Organic Growth Increase cash flow via logical additions to existing assets, volume growth and annual contractual PPI-related revenue growth HFC Growth Partner with HollyFrontier to grow current asset base with projects and joint acquisitions Third part
Slide 21: HEP Growth: Distributable Cash Flow Since Inception
HEP Growth: Distributable Cash Flow Since Inception 21 milli o n s $0 $20 $40 $60 $80 $100 $120 $140 $160 2005 2006 2007 2008 2009 2010 2011 2012 $41 $47 $51 $60 $72 $91 $100 $153 HFC received approximately $70mm cash distributions for FY2012
Slide 22: Value of HFC's LP & GP Interests in HEP
Value of HFC’s LP & GP Interests in HEP 22 *Based on a range of recent HEP unit prices on the NYSE for valuation purposes. NYSE closing price on 12/31/13 was $32.33. Methodology: • GP values are equal to quarterly GP IDR cash flow (for 3Q 2013) on an annualized basis minus the $5m GP giveback for th
Slide 23: HollyFrontier Corporation contact details
HollyFrontier Corporation (NYSE: HFC) 2828 N. Harwood, Suite 1300 Dallas, Texas 75201 (214) 954-6510 www.hollyfrontier.com Julia Heidenreich, VP, Investor Relations Blake Barfield, Investor Relations investors@hollyfrontier.com 214-954-6510 23
Slide 24: Appendix
Appendix 24
Slide 25: HollyFrontier Enterprise Value
HollyFrontier Enterprise Value 25 *As of 3Q13 publicly available financial statements. NYSE closing price on 12/31/13 was $49.69. **Holly Energy Partners Debt is non-recourse to HollyFrontier **See p. 22 for additional details on GP and LP valuation ranges and methodology All amounts in millions exc
Slide 26: Logistics Matter
Logistics Matter Proximity to Crude Oil Pricing Hubs and Takeaway Infrastructure 26 Prices reflect estimated transportation cost per barrel via pipeline, rail and marine Sources: Barclays, Credit Suisse, Deutsche Bank, Macquarie, and Tudor Pickering Holt
Slide 27: Feedstock Flexibility
Feedstock Flexibility* • High WTI/WTS ($3 or higher) • Low WTI/WCS ($8 or less) • WTI/Brent Range ($10 to $20) • Low WTI/WTS ($2 or less) • High WTI/WCS ($20 or higher) • WTI/Brent Range ($10 to $20) • Low WTI/WTS ($2 or less) • Low WTI/WCS ($8 or less) • WTI/Brent Range ($20 or higher) *Please note
Slide 28: Mid-Continent: El Dorado & Tulsa Refineries
Mid-Continent: El Dorado & Tulsa Refineries The Mid-Continent Region comprises our Tulsa and El Dorado Refineries and has a combined crude oil processing capacity of 260,000 BPSD. Mid-Continent Sales of Refinery Produced Products 254,350 BPD • Located in El Dorado, Kansas • 135,000 BPSD capacity and
Slide 29: Southwest: Navajo Refinery
Southwest: Navajo Refinery The Southwest Region consists of our Navajo Refinery and has a crude oil processing capacity of 100,000 BPSD. In addition, we manufacture and market commodity and modified asphalt products through the Southwest Region. Southwest Sales of Refinery Produced Products 99,160 B
Slide 30: Rocky Mountain: Woods Cross and Cheyenne Refineries
Rocky Mountain: Woods Cross and Cheyenne Refineries The Rocky Mountain Region comprises of our Cheyenne and Woods Cross Refineries and has a combined crude oil processing capacity of 83,000 BPSD. Rocky Mountain Sales of Refinery Produced Products 77,550 BPD • Located in Cheyenne, Wyoming • 52,000 BP
Slide 31: Holly Energy Partners
Holly Energy Partners Holly Energy Partners owns and operates substantially all of the refined product pipeline and terminalling assets that support our refining and marketing operations in the Mid- Continent, Southwest and Rocky Mountain regions of the United States. • 2,900 miles of crude oil and
Slide 32: Financial Metrics
Financial Metrics* 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Average WTI/Brent (SNAPWTIB) $ 1.11 $ 1.04 $ 2.40 $ 3.35 $ 1.57 $ 0.33 $ (0.28) $ 1.34 $ (0.47) $ (0.57) $ 1.00 ROIC 29.1% 5.2% 7.9% 20.8% 44.0% 45.0% 45.3% 21.8% -2.3% 4.8% 22% NI/BBL $ 2.23 $ 0.41 $ 0.57 $ 1.59 $ 4.45 $ 6.28 $ 7.
Slide 33: Definitions
Definitions Non GAPP measurements: We report certain financial measures that are not prescribed or authorized by U. S. generally accepted accounting principles ("GAAP"). We discuss management's reasons for reporting these non-GAAP measures below. Although management evaluates and presents these non-