Valero Energy Corporation · NYSE:VLO
Valero Energy — Investor Presentation (November 2016)
37 slides from Valero Energy's investor presentation, Nov 16, 2016
Slide 1: Investor Presentation November 2016
Investor Presentation November 2016 Exhibit 99.01
Slide 2: 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
Slide 3: Who We Are
Who We Are World’s Largest Independent Refiner 15 refineries, 3 million barrels per day (BPD) of high-complexity capacity Greater than 70% of capacity located in U.S. advantaged Gulf Coast and Mid-Continent Wholesale fuels marketed and distributed through branded and unbranded channels Approximately
Slide 4: Strong Presence in Advantaged U.S. Gulf Coast and Mid-Continent
Strong Presence in Advantaged U.S. Gulf Coast and Mid-Continent Refineries and ethanol plants are in advantaged locations See slide 20 for capacities.
Slide 5: Current Macro Environment
Current Macro Environment Abundant global supply of crude oil and natural gas Forecasted world GDP growth Product shortages in Latin America, Europe, Africa, and Eastern Canada Demand response to lower product prices SUPPLY DEMAND North American logistics build out added efficiency and removed Mid-C
Slide 6: Safety and Reliability are Imperative for Profitability
Safety and Reliability are Imperative for Profitability See slide 18 for notes regarding this slide.
Slide 7: Advantaged Location in U.S. Gulf Coast
Advantaged Location in U.S. Gulf Coast See slide 18 for notes regarding this slide. Capacities from company 10K reports as of December 31, 2015. (1)Includes 90 MBPD of new capacity from the Houston crude unit which was commissioned in June 2016. Over 55% of our throughput capacity is located in U.S.
Slide 8: High Complexity Refineries and Lowest Cost Operator
High Complexity Refineries and Lowest Cost Operator See slide 18 for notes regarding this slide. Refining cash operating expenses for nine months ended September 30, 2016.
Slide 9: Our Portfolio Facilitates Optimization of Product Exports
Our Portfolio Facilitates Optimization of Product Exports Distillate Gasoline See slide 18 for notes regarding this slide. (1)Actual export volumes; 2016 volumes through September 30. (1)
Slide 10: Capital Allocation
Capital Allocation Maintain Strong Balance Sheet (1)Debt-to-cap ratio based on total debt reduced by $2 billion of cash. (2)Peer group includes PSX, MPC, TSO, HFC, and PBF. (3)Payout ratio is the sum of dividends and stock buybacks divided by net income from continuing operations excluding special i
Slide 11: Capital Investments Focused on Maintaining Asset Base, Enhancing Margins, and Growing Logistics
Capital Investments Focused on Maintaining Asset Base, Enhancing Margins, and Growing Logistics Budgeted $2.6 billion in 2016 Estimated actual expenditures of $2.4 billion 2016 growth investments allocated approximately 50/50 for logistics and asset optimization Logistics Expect about 95% to be MLP-
Slide 12: Investing in Asset Optimization
Investing in Asset Optimization Products & Other Hydrocracker expansions at Port Arthur (Oct 2015) and St. Charles (Mar 2016) expected to increase distillate yield by an estimated 23 MBPD New 13 MPBD Houston alkylation unit expected to startup in 1H19 Projects under development: Octane enhancement F
Slide 13: Our Sponsored MLP Valero Energy Partners LP
Grow VLP primarily through drop downs from VLO Target organic growth opportunities and logistics deals strategic to VLO’s core business or that provide third party revenue Grow annual distributions at target rates of 25% through 2017 and at least 20% for 2018 Target investment grade credit rating Ou
Slide 14: Approximately $1 Billion of Estimated MLP Eligible EBITDA
Approximately $1 Billion of Estimated MLP Eligible EBITDA(2) Inventory Racks, Terminals, and Storage(1) Over 70 million barrels of active shell capacity for crude oil and products 139 truck rack bays Rail Approximately 5,250 purchased railcars, expected to serve long-term needs of ethanol, asphalt,
Slide 15: Renewables Business
Renewables Business Renewables Operations 11 ethanol plants with 1.4 billion gallons annual production capacity Low capital investment with scale, located in corn belt Operational best practices transferred from refining Diamond Green Diesel(1) plant 50-50 JV with approximately 11 MBPD of renewable
Slide 16: We Believe Valero is an Excellent Investment
We Believe Valero is an Excellent Investment Chart data sources: Company reports and Bloomberg as of November 3, 2016. See slides 18 and 31 – 36 for notes and non-GAAP disclosures, respectively. (1)Payout ratio is the sum of dividends and stock buybacks divided by net income from continuing operatio
Slide 17: Appendix Contents
Appendix Contents Topic Pages Notes 18 Cumulative Cash Returns 19 Refining Operating Statistics 20 – 21 Natural Gas Cost Sensitivity 22 Crude Oil Transportation 23 – 24 Fundamentals 25 – 28 Valero Energy Partners LP 29 – 30 Non-GAAP Disclosures 31 – 36 Investor Relations Contacts 37
Slide 18: Notes
Notes Slide 5 Macro environment themes represent industry consultant views. Slide 6 Contractor total recordable incident rate from U.S. Bureau of Labor Statistics. Tier 1 process safety event defined within API Recommended Practice 754. Industry benchmarking and Valero’s performance statistics from
Slide 19: Delivering Cash Returns to Stockholders is One of Our Priorities
Delivering Cash Returns to Stockholders is One of Our Priorities 2016 YTD through September 30. WASO from company 10K and 10Q filings. $10.1 billion Reduced share count by 103 million shares and increased quarterly dividend by 300% since 2011.
Slide 20: Our Refining Capacity and Nelson Complexity
Our Refining Capacity and Nelson Complexity Refinery Capacities (MBPD)(1) Nelson Complexity Index Throughput Crude Corpus Christi(2) 370 275 15.1 Houston 175 90 15.4 Meraux 135 125 9.7 Port Arthur 375 335 12.7 St. Charles 305 215 16.1 Texas City 260 225 11.1 Three Rivers 100 89 13.2 U.S. Gulf Coast
Slide 21: Reliability Initiatives Have Improved Refinery Availability and Enabled Higher Utilization
Reliability Initiatives Have Improved Refinery Availability and Enabled Higher Utilization
Slide 22: U.S. Natural Gas Provides Opex and Feedstock Cost Advantages
U.S. Natural Gas Provides Opex and Feedstock Cost Advantages Natural gas prices year to date through November 7, 2016 for U.S. and Europe. Estimated per barrel cost of 904,000 mmBtu/day of natural gas consumption at 93% refinery throughput capacity utilization, or 2.8 MMBPD. $690 MM pre-tax annual c
Slide 23: Pipeline Takeaway Capacity Additions Have Increased Crude Competition in the U.S. Gulf Coast
KEY Trunkline 400 Flanagan 600 Pipeline Takeaway Capacity Additions Have Increased Crude Competition in the U.S. Gulf Coast TransCanada Mainline Conversion 1,100 TMX 890 Grand Mesa / Saddlehorn 350 Niobrara Seaway 450 Completed 2016 or Later Startup Capacities in MBPD. Pipeline completion and startu
Slide 24: Investing to Improve Access to North American Crude
Investing to Improve Access to North American Crude Diamond Pipeline 440 miles of 20-inch pipe (200 MBPD capacity) connecting Memphis to Cushing Received permits required to begin construction; project is on track for completion in 4Q17 Provides supply flexibility and ability to improve crude blend
Slide 25: Production Growth Provides Resource Advantage to North American Refiners
Production Growth Provides Resource Advantage to North American Refiners Source: DOE, 2016 data through August
Slide 26: Global Petroleum Demand Growth Expected to Outpace Refinery Capacity Expansion
Source: Consultant and Valero estimates. Net Global Refinery CDU Additions = New Capacity + Restarts – Announced Closures. (Does not include Condensate Splitters.) Global Petroleum Demand Growth Expected to Outpace Refinery Capacity Expansion
Slide 27: U.S. Gasoline Exports
Gasoline represents all finished gasoline plus all blendstocks (including ethanol, MTBE, and other oxygenates) Source: DOE Petroleum Supply Monthly data through August 2016. 4 Week Average estimate from Weekly Petroleum Statistics Report and Valero estimates. U.S. Gasoline Exports
Slide 28: U.S. Diesel Exports
Source: DOE Petroleum Supply Monthly data through August 2016. 4 Week Average estimate from Weekly Petroleum Statistics Report. U.S. Diesel Exports 12 Month Moving Average (MBPD)
Slide 29: Diversified VLP Portfolio Integrated With VLO's Refining Assets
Diversified VLP Portfolio(2) Integrated With VLO’s Refining Assets (1)Total consideration value. (2)Portfolio assets as of Nov 10, 2016. Texas Crude Systems McKee, Three Rivers, Wynnewood July 1, 2014 - $154 mm(1) Houston and St. Charles Terminals March 1, 2015 - $671 mm(1) Corpus Christi Terminals
Slide 30: VLP's Competitive Strengths
VLP’s Competitive Strengths Strong Sponsor Strategic relationship with investment grade sponsor VLO Quality Assets High quality, well maintained assets integrated with VLO’s refineries and located in advantaged regions Stable and Predictable Revenues Fee-based agreements with no direct exposure to c
Slide 31: VLP Non-GAAP Disclosures: EBITDA, Distributable Cash Flow, Distribution Coverage, and Debt-to-EBITDA
VLP Non-GAAP Disclosures: EBITDA, Distributable Cash Flow, Distribution Coverage, and Debt-to-EBITDA VLP defines EBITDA as net income before income tax expense, interest expense, and depreciation expense. VLP defines distributable cash flow as EBITDA less (i) EBITDA attributable to its Predecessor a
Slide 32: VLP Non-GAAP Disclosures: EBITDA, Distributable Cash Flow, Distribution Coverage, and Debt-to-EBITDA
VLP Non-GAAP Disclosures: EBITDA, Distributable Cash Flow, Distribution Coverage, and Debt-to-EBITDA VLP uses distributable cash flow to measure whether it has generated from its operations, or “earned,” an amount of cash sufficient to support the payment of the minimum quarterly distributions. VLP’
Slide 33: Non-GAAP Disclosures: VLP EBITDA, Distributable Cash Flow, and Distribution Coverage
Non-GAAP Disclosures: VLP EBITDA, Distributable Cash Flow, and Distribution Coverage VALERO ENERGY PARTNERS LP RECONCILIATION OF NON-GAAP MEASURES TO MOST COMPARABLE AMOUNTS REPORTED UNDER U.S. GAAP (Unaudited, in Thousands, Except Ratio Amount) Reconciliation of net income to EBITDA and distributab
Slide 34: Non-GAAP Disclosures: VLP Debt-to-EBITDA
Non-GAAP Disclosures: VLP Debt-to-EBITDA VALERO ENERGY PARTNERS LP RECONCILIATION OF NON-GAAP MEASURES TO MOST COMPARABLE AMOUNTS REPORTED UNDER U.S. GAAP (Unaudited, in Thousands, Except Ratio Amount) September 30, 2016 Numerator: Total debt and capital lease obligations $ 894,057 Nine Months Ended
Slide 35: Non-GAAP Disclosures: VLO Return on Invested Capital
Non-GAAP Disclosures: VLO Return on Invested Capital VALERO ENERGY CORPORATION RECONCILIATION OF NON-GAAP MEASURES TO MOST COMPARABLE AMOUNTS REPORTED UNDER U.S. GAAP (Unaudited, in Millions, Except Percentage and Ratio Amounts) Nine Months Ended September 30, 2015 Year Ended December 31, 2015 Nine
Slide 36: Non-GAAP Disclosures: VLO EBITDA and Net Debt-to-EBITDA
Non-GAAP Disclosures: VLO EBITDA and Net Debt-to-EBITDA VALERO ENERGY CORPORATION RECONCILIATION OF NET INCOME TO EBITDA (Unaudited, in Millions, Except Ratio Amount) Nine Months Ended September 30, 2015 Year Ended December 31, 2015 Nine Months Ended September 30, 2016 Net income $ 3,706 $ 4,101 $ 2
Slide 37: Investor Relations Contacts
Investor Relations Contacts For more information, please contact: John Locke Vice President, Investor Relations 210.345.3077 john.locke@valero.com Karen Ngo Manager, Investor Relations 210.345.4574 karen.ngo@valero.com
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