Valero Energy Corporation · NYSE:VLO
Valero Energy — Investor Presentation (May 2007)
17 slides from Valero Energy's investor presentation, May 15, 2007
Slide 1: 2006 Record Year - 2007 Great Start
2006 Record Year - 2007 Great Start Terrific financial results for 2006 $5.5 billion net income, $92 billion in revenues Record $8.64 EPS Largest capital investment program in company history - $3.75 billion Purchased 35 million shares of stock (5% of outstanding shares) #1 in Fortune's Best Big Com
Slide 2: 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 33.99 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 3: Gasoline Fundamentals Bullish Factors Continue
Gasoline Fundamentals Bullish Factors Continue Demand at high levels YTD growth at 1.8% over 2006 Strong worldwide economies Solid demand around the world for naphtha and other blendstocks Pulling components from gasoline pool 5-Yr Avg 2007 2006 High Low 1/6/2006 8.886 9.292 9.221 9.221 8.665 1/13/2
Slide 4: 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 5: 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 6: Feedstock Differentials Still Wide
Feedstock Differentials Still Wide Worldwide crude supply mix expected to be stable going forward Heavy sours hold steady Near-term significant new production is light sweet crude But demand for light sweet crude growing rapidly to meet worldwide clean fuels requirements 2005 2010 Light Sweet 0.34 0
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 1.7 million BPD increase (2% growth) Industry refinery expansions and new construction costing much more and taking much longer Since 2004, prices of steel
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: Valero's History - Acquisitions
Valero's History - Acquisitions Aggressive acquisition strategy was the right call over the past decade VLO Throughput Capacity '3-2-1 Maya Diff 1997 0.53 3.321046328 5.603151767 1998 0.735 2.472635628 5.628834473 1999 0.785 1.806875275 4.791944615 2000 1 4.339628166 7.492355576 2001 1.9 4.33108198
Slide 10: Strategic Focus Has Shifted
Strategic Focus Has Shifted Acquisition market has changed Asset values have risen relative to our valuation Easy bargains are gone Now time to focus on Bottom-line growth in EPS and cash flow per share Substantial opportunities for improving operations Strategic projects for organic growth Reducing
Slide 11: 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 12: 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 $4 billion share repurchase authorization - tot
Slide 13: Strategic Summary
Strategic Summary Maintain a strong balance sheet Optimize asset portfolio Achieve meaningful EPS and cash flow per share growth by: Internal improvements in operating and financial performance Organic growth investments Share repurchases - making our shares more valuable Continue to look for extern
Slide 14: Appendix
Appendix
Slide 15: 2007 Major Strategic Projects
2007 Major Strategic Projects Evaluating large hydrocracker and expansion projects at St. Charles and Port Arthur Planning bottoms-upgrading project at Jean Gaulin (Quebec) refinery Refinery Project Start Up Total Cost1 ($mm) Annual EBITDA ($mm) IRR1 Port Arthur Crude Expansion 1Q $157 $90 40% Houst
Slide 16: 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 17: 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