Valero Energy Corporation · NYSE:VLO
Valero Energy — Credit Suisse Energy Summit 2014
59 slides from Valero Energy's conference presentation, Feb 12, 2014
Slide 1: Investor Presentation, February 2014 Credit Suisse Energy Summit
Exhibit 99.01 Investor Presentation February 2014 Credit Suisse Energy Summit
Slide 2: Safe Harbor Statement
Safe that Statements Securities note 2forecasted, Harbor actual Act see contained Statement of Valero’s results 1933inand could annual thisthe presentation differ Securities reports materially onExchange that Formstate from 10-Kthe those Act and company’s ofprojected quarterly 1934. The orin reports
Slide 3: Valero Energy Overview
•3•–– Diamond Valero 16World’s 2.9 10 Energy Created largest refineries million Approximately Nearly Brands One of 1,900 include the Approximately efficient Overview publicly barrels Green corn independent per traded 7,400 largest sites Valero, Diesel day belong branded renewable ethanol 10,000Ultra
Slide 4: Valero's Geographically Diverse Refinery Operations
Valero’s Refinery (000 Corpus Houston Meraux Port St. Texas Three Gulf Ardmore McKee Memphis Mid-Con Pembroke Quebec North Benicia Wilmington West Total 4Suspended Charles Arthur bpd) Coast Coast Through-put or Atlantic City Rivers Christi 170 City 170 Avg. 135 Geographically 165 Capacities 90 455 1
Slide 5: Valero's Strategy
•5resource Valero’s Invest Exploit Process toNorth Strategy Pursue VLP) • for Increase benchmarksmore • Expand natural of to domestic MLP-able Enhance existinghydrocrackers operations gas and light Returns logistics growing NGLs Gain crude our and with oil assets Increase efficiencies upgrading larg
Slide 6: Key Industry Market Trends
•6•– Industry Key Growth Market Expect Lower-cost Global U.S. Trends in strong U.S. refiners, and isdistillates making supply North Canadian significant American growth demand mainly growth on Gulf shale development ininfrastructure natural crude oil, gas arenatural yields Coast, also higher provide
Slide 7: Growth in North American Crude Oil Production
18 16Crude MMBPD 2010 Source: Largest Canadian Heavy Light Other Syncrude U.S. Non-Canadian Crude Imports 7reduces and shale Shale 2011 Canadian/ 14 U.S. production Canadian growth imports EIA, Canadian 12 crude crude 2012 Crude 10 Consultants, 8coming 2013E and 6growth Production Crude 4 heavy 2 0f
Slide 8: Valero's U.S. and Canadian Crude Oil Price Advantage
Valero’s Alberta -$13 U.S. -$12 Rail +$1 Cushing -$5 Midland Mid-Continent Brent cost Pipe East 8Coast, to to advantage $13 $9/bbl Coast, $4/bbl Ship toBrent to +-$8 and -$2 -$16 -$15 $2 Eastern Estimate Brent toBrent most Brent-priced Houston $15/bbl Brent West -$1 Rail $4versus to to U.S. Canada U
Slide 9: Valero's Strategy: Cost-Advantaged Crude Oil Volumes
••North Valero’s Gulf Expect Coast St. Strategy terminal Region refineries Charles: to expect Supply totodeliver benefit approximately Incremental asoil 20 toflows MBPD Volumes increase rail on of MBPD Cost-Advantaged cost-efficient unloading incapacity pipelines readyCrude inMBPDOil 1Q14, plan toby
Slide 10: Lower-Cost Natural Gas Provides Significant Cost Advantage
Lower-Cost Significant Natural VLO Valero’s /bbl Asian @$16/mmBtu $3.5 Europe higher @$4/mmBtu $costs Note: 100123456 $1.27/bbl $5.06/bbl @$ $1.8 tax Expense refinery Per LNG pre- annual higher 10/mmBtu gas billion Estimated barrel production annual isNatural per operations acosts $3.16/bbl cost-adv
Slide 11: Global Distillates Demand and Margins
•11 Global Distillates Distillates Europe /bblMMBPD GC $18 Source: 28 Gasoline Projected Gasoline—ICE USGC Argus 27 (diesel, 25Product Diesel WorldDemand demand continues diesel kero, to growth 26 Product Brent Margins Growth jetrate growth be$16 short 24 fuel) rate Demand GC isYields margins is1.5x
Slide 12: U.S. Refining Is Globally Competitive
•12 U.S. MMBPD 0.5 1.0 1.5 2.0 Net -1.0 -0.5 0.0 1998 -2.5 -2.0 -1.5 U.S. Refining Gulf Refinery 90% 95% “Rockies” “Gulf 85% 80% con” “Mid- Coast” 75% 70% “Western PADD 65% Europe Source: flipped Refiners Coast Net exports These “East Coast”U.S. Europe” 2001 capacity 4“West EIA PADD inCapacity from
Slide 13: Continued Global Refining Demand Growth
•13 Continued MMBPD -1.0 0.0 1.0 2.0 3.0 -2.0 2002 -3.0 U.S. Emerging Source: Global ismarkets Particularly Refining Non-OECD World OECD 2003 Consultant 2004 Demand strong a(excl. globallead Petroleum andU.S.) 2005 2006 Growth in terms growth Demand Valero 2007 Important of 2009 in –2008 business La
Slide 14: Expect Limited World Refinery Capacity Growth
•2.0 WorldExpect Refinery •– Mainly New significant capacity new Capacity plants new Growth global announcements in2017 Asia and refining thefrom Middle additions Brazil, flatin the next several years Other Due MMBPD 1.6 range 2013 0.0 0.4 0.8 1.2 China Source: 14 toprojects yields, Potential 2014 o
Slide 15: Valero Total Capital Investments
•15 2013 Valero Total Strategic/ Reliability Sustaining/ Growth $1,255 $795 Turnarounds spending Regulatory 2013 Actual $720 Total Capital Investments $635 spending Economic “Stay- $3,000 $70 2014 in-Spending $665 $90 business” Estimate $2,755 included $1,525 Comprise (millions) $63Approximately mil
Slide 16: Growth Investments Breakdown
•16Petchems Growth 2013 2% 14% 46% 31% 2014 Nat & 10% Other Hydrocracking Processing Total 45% Logistics 27% Processing Gas Growth Oil 9% Growth actual estimate Investments /7% 9% NGL Light $1.255 investments Investments $1.525 Other Upgrading Crude billion Primarily Light billion Oil consist Crude
Slide 17: Strategy: Logistics Growth Investments
Strategy •Logistics Increase Growth access Investments totogeneral capability cost-advantaged to export productscrudes and crudes SSt. •–•–Growth 5,320 1,800 Investments Crude Quebecrail Approximately have Several Expect Other Expect 17 rail cars been purchased, unloading 55% received logistics inve
Slide 18: Valero Energy Partners LP
Traditional, Valero’s –Expect Initial Port McKee Memphis Valero Asset Highly Long Reliable, High-quality (1) 1868.6% 100% Pursuing VLP Arthur operating Selection Assets retained has Energy at first integrated Products GP owns primary of ratable, least Logistics substantial additional LP Logistics ow
Slide 19: Strategy: Hydrocracking Growth Investments
Hydrocracking Strategy Emphasize Designed Growth Increased 10 –50 19Relatively Strong Both Uses Estimated Expanding Intend MBPDhydroprocessing new Investments to New global to Port Diamond in expand distillates hydrocrackers cost benefit high Meraux lower-cost St. Arthur Growth distillates per Charl
Slide 20: Strategy: Increase Light Crude Processing
Investments Increase Strategy Fill –Constructing McKee Also, 2090underutilized 70 Relatively Estimate Sites MBPD evaluating selected crude processing >25% to at low two unit Houston Corpus Process due projects cost IRR conversion new expansion of toper on crude configuration North Christi More refin
Slide 21: Improving Industry Benchmarks: Refinery Reliability
Improving Industry –Our Improvement 75% 1st 100% 50% Source: 0% 4th 25% Quartile 3rd 21Improved Further Invested Developed Personnel goal 2012 2008Solomon surveys is improvements 2nd capital Our to reliability committed and in become 2010 Refining Key reflect implemented Associates to revamp Benchma
Slide 22: Valero's Ethanol Segment Acquisitions
10Since Significant Acquired –Valero’s Ethanol $millions $450 2Q09—2010 -$50 Note: 222Q09: 1Q10: plants $350 See acquisition Segment Acquired Added Ethanol low-cost with portfolio 550 Appendix $250 cash 2011 total 3generated $150 Segment EBITDA plants acquisitions 72012 for through production plants
Slide 23: Returning More Cash to Stockholders
•23 Returning Cash Stock 2010 $0 Returning –•– Intend Increased Doubled Goal Spun More isthe off Maintaining $1,400 millions $800 Paid Ended Net $600 2011 Returned debt-to-cap Buybacks offto 2013 $480 2012 $400 pay more Cash quarterly cash to Stockholders investment with to off million 2013 $1,200 $
Slide 24: What We Believe
••markets We Believe Expect Industry Lower-cost and Global U.S. continued Valero process Ismore installing U.S. distillates competitively an growth and Excellent in significant Canadian demandvolumesNorth Buy growth exporting American Today infrastructure natural of into light gas tooil, oil higher
Slide 25: Appendix
VALERO Appendix
Slide 26: Increasing Exports Capability
•26 Increasing •–011 Exports Gasoline Diesel Quebec Valero’s MBPD 500 02400 Our from Diesel 300 Actual 600 200 enable Transportation Prices Product Valero in from U.S.and Products exports quality export is 325 Valero investing costs and versus Pembroke 225 Gasoline 2012 100 Products to 450 Actual Ex
Slide 27: Strategy: Gas-to-Liquids Methanol
Strategy •Upgrading On Methanol 110 Estimate 100 annual 98U.S. 60 650 540 Gas-to-liquids U.S. Southern Primary Global –• 0Potential Capacity Captures Methanol If8approved, Global 12 11 70 and Natural isDemand ademand average, growthisgrowing uses Louisiana Evaluating 7global ~7% (LHS) of athe price
Slide 28: Strategy: Upgrading NGLs
Strategy •NGLs Consistent Upgrading Expect strategy length thePresents continued –domestic feedstock growthanstartup inconstruction the Opportunity in of advantage supply NGLs ofup a1Q103Q10 new toinCreate NGLs and 12.5 and MBPD bolt-on/synergistic andValue condensates condensates supply alkylation
Slide 29: Unlocked Value: Spun off CST Brands
•29 Unlocked Spun –•– Valero CST Valero Net CST off Value ofBrands, has tax toInc. stockholders via traded received liquidated Brands liability provides Retail trading at more nearly isCST now in and Spinoff on $1our than November retail thelargest double NYSE billion Valero’s working with 2013 busi
Slide 30: Improving Personnel Safety and Environmental Performance
•30of Improving Personnel 1.4 Contractors 1.6 Employees 1.8 2007 0.0 0.2 0.4 0.6 0.8 1.0 1.2 Total Tier Process 0.00 0.05 0.10 0.15 0.20 Environmental 40 30 MBPD 20 #010 *Source: 0510Tons Legacy 15 Industry* 2007200820092010201120122013 Safety Events 1200820092010 Recordable Process /Safety U.S. Saf
Slide 31: Valero's 2013 Crude Oil Sources
Our MBPD 1,200 North Valero’s All A Crude 31majority crude Crude 1,000 America and 2013 crude isfeedstocks intermediate and ofhedged 800 Crude Valero’s and Feedstock Middle 600 intermediate Oil against 400 are crude East Sources feedstock 200 received Supply LIFO Africa oil 0 purchases feedstock inv
Slide 32: Valero's Cost-Advantaged Crude Processing
Valero’s MBPD 0100 Note: crudes, 320 2010 200 Non-U.S. Gulf such Processing 2011 Coast as1Q12 Maya; andMid-Con of Canadian 2Q12 and Cost-Advantaged high-acid 3Q12 MBPD crude 4Q12900 runs crudes, 1Q13 West U.S. exclude such 2Q13 and Coast as Valero’s Canadian 3Q13 Pazflor. Quebec 4Q13 Pembroke Crude
Slide 33: Crude Oil Prices Versus ICE Brent
Crude$5 $/bbl Source: LLS WTI ANS Mars Maya -$25 -$20 -$15 -$10 -$5 $0 33 Oil Argus; Prices2014 Versus year-to-date ICE Brentthrough January 31. LLS prices are roll adjusted.
Slide 34: Regional Refinery Margin Indicators
Valero’s $/bbl $20 Mid-Con West 2002 Source: YTD 34 $15 Coast 2003 $25 Argus; $10 Regional WTI 2004 ANS $5Cracking 2014 $0 2005 Medium-Sour Refinery year-to-date 2006 Indicator 2007Coking 2008 through Margins 2009 Northeast January 2010 Brent 31; 2011see 2012 Light-Sweet Appendix 2013 2014 for Crack
Slide 35: Margin Indicator Definitions
•• Gulf Definitions West Coast Mid-con 10ppm Vacuum North of CoastValero’s Indicator: Colonial Indicator: Gasoil Regional Indicator: Atlantic cargo (GC Colonial Pipeline—LLS) [(Group prompt) (San Indicator: 3Indicator Fran (NYH CBOB 85prompt—WTI xfor 40%] CARBOB Conv Margins CBOB 87 A grade- xGasoli
Slide 36: Logistics Constraints Create Crude Discounts
Logistics Brent (Trailing (A) Trailing (B) Lighter (D) (E) (F) Heavier (H) (I) I$0 F C E B S H G A 36ource: Crude DWCS $10 WTS Bakken Syncrude WTI LLS Maya less $20 (C) Argus, Pricing (G) 4-weeks Mid. 12-months, Constraints Crude $30 WTI Mars data by $40 Cush. Prices Location as$/bbl) Create of Janu
Slide 37: Canadian Heavy Crude Pipeline and Rail Options
••– TransCanada Canadian Pipeline Seaway Heavy Currently Expansion Enbridge Completion – line industry Crudes shipping expected Mainline expectedhas Have light to several Several and options toheavy complete toCushing Flanagan mid-2014,South Options sour inVLO but2014 via in various to the from Enbr
Slide 38: Valero's U.S. Gulf Coast View
•Heavy Valero’s U.S. LLS, and View Canadian WTI, Plentiful onBakken, U.S. Light supply andGulf Eagle Crude Coast price Ford, Oil Medium on Permian, advantageGulfand Coast pushesetc. Heavy out inOil foreignPrices Versus imports Brent of similar quality, typically Brent-priced ••Medium Mars, Key Maya,
Slide 39: Increasing U.S. Oil and Natural Gas Production
Increasing 40 1973 1976 1988 1991 2003 2006 Source: MBPD 10,500 10,000 Imports 7,000 39 452009 Bcf/day 1979 Natural Gas Production 5055606570 4,500 8,000 Production Crude DOE 1994 U.S. 1982 2012 2005 Oil 1997 Oil 1985 2006 Imports 7,500 and 2000 2007 Natural 9,500 & Production 2008 7,000 Gas2009 Pro
Slide 40: Rapid Pipeline Additions to Gulf Coast
•Other U.S. •40 Rapid GulfU.S. Light Recent5Coast increase GCis crudes Benefitting toincompany have completion pipeline been from capacities pricing of pipelines Cost-Efficient below and toLLS move increased inland Crude North in refining western flows Oil Pipeline parts are American of Gulf buildin
Slide 41: Growth in Crude Oil Pipeline Capacities
Growth Year-End Seaway Cushing Keystone Total—150 Longhorn Permian BridgeTex Harvest Eagleford Enterprise KinderMorgan Plains NuStar ETP/Enbridge Patoka Blueknight Other SXL Total Source: 41 WTG Permian Eaglebine 130 — ——130 Cactus 185 130 Consultants, of 150 455 — Throughput MarketLink 1,185 225 35
Slide 42: Atlantic Basin Capacity Closures
•42 Atlantic 0 Capacity MPBD 1,400 6,000 1,600 1,200 5,000 1,000 02008 Sources: 2009Basin Combined Atlantic Rest 4,000 Annual closures Closures with Industry 2010 of800 World Basin Global 3,000 2011 and have poor RestReduce Atlantic 2012 been Consultant CDU 600 of2,000 2013 WorldExcess concentrated
Slide 43: Global Refinery Closures
Global Perth Bakersfield,CA Westville, Bloomfield, Teesside, Gonfreville, Dunkirk, Toyama, Ingolstadt, Japan* Arpechim, Odessa, Montreal, Yorktown, Reichstett, Wilhemshaven, Sodegaura, Cremona, Funshun, Keihin Clyde, Marcus Berre, CDU Location Coryton, Petit St. Aruba Rome, Fawley, Trecate, Paramo,
Slide 44: Global Refinery Closures (continued)
GlobalCapacity CDU Location Lytton, Geelong, Nishihara, Inchon, Whitegate, Milford Barbers Tacoma, Come-By-Chance, Pasadena, Bahia Gothenburg, Mazeikiai, Okinawa, Falconara, Hamburg, Collombey, Lindsey, Sources: 44 Blanca, Refining Australia Korea Point, Haven, WA UK Industry Owner Australia Japan T
Slide 45: Low-Cost U.S. Natural Gas Prices
Low-Cost U.S. Prices VLO /bbl Brent $120 Japan $100 $80 $60 ($10.50/ $20 ($3.73/ 2002 $0 Source: 45 ($15.70/ Europe $23/bbl Crude natural 2003 refinery $109/bbl LNG are mmBtu) Argus $40 expected U.S. Oil 2004 $95/bbl NBP gas mmBtu) operations & versus Natural has 2005 Bloomberg; $63/bbl to traded Na
Slide 46: U.S. Gasoline Fundamentals
546 Gasoline $25 $20 Jan -$15 -$10 -$5 9.5 7.5 U.S. 1200 5Jan 9Feb USGC $15 Source: 30 28 20 10 26 U.S. 8.5 Feb Net Source: Mar yr $10 Fundamentals high Brent Apr 24Argus; 22 $5 Gasoline 1000 8 Mar yr Imports DOE 800 high Apr $0 55May 2014Gasoline yr Dayslow Demand weekly 600May of yr400 monthly Jun
Slide 47: U.S. Distillate Fundamentals
547 Distillate USGC $25 Jan $0 4.6 U.S. -100 5Jan Feb $20 Source: 54 49 4.8 U.S. 44 U.S. 4.4 Feb Source: Brent 39Mar yr $15 4.2Fundamentals 4high Argus; Apr $10 ULSD Distillate 34 29 553.6 Distillate Distillate -300 Mar yr DOE-5003.8 low Apr May 2014 24 $5 weekly Net -700 yr DaysCrack low Jun data D
Slide 48: U.S. Demand Indicators
5.0% YoY -3.0% 2009 Jul Source: 01. Bureau Transportation Statistics Q1 65% Load 2013 North Year 30% Change 4WMA 2008 -30% U.S. -600-500 Nov-08 Jun-08 S. Feb-10 Sep-09 Jul-10 May-11 Mar-12 Demand Latest Aug-12 Jan-13 Data Nov Jun-13 Average) 0% Nov-13 Cargo Long 48 51.Oct 02 03 04 06 07 09 10 010% 1
Slide 49: U.S. Moving Index
U.S. 95 Moving Index 85 Jan-09 Jul-08 ATA Adj Jan-12 Jul-12 Jan-13 Source: 92 Jan-08 BTS Jul-09 Jan-10 Jul-10 Year Jan-11 Avg Jul-11 Freight: 125 130 120 1998 49 100 95 94SA 100 Transport 1999 105 96 ATA Avg Year Index Through Jan-11 12-Mth Moving Truck Services Transportation Seasonally Nov-13 12-M
Slide 50: Mexico Crude, Gasoline and Diesel Imports
Mexico 1,400 Crude 90% Gasoline 550 2007 Source: Diesel 02250 50 007200 500 85% 2008 1,350 Unit Gross PEMEX, Statistics 450 150 Gross 80% 2009 Throughput Utilization 1,300 400 100 Imports 75% Imports 2010 350 50 latest 1,250 70% (MBPD) 300 2011 data (MBPD) 1,200 65% 250 2012 December 200 60% 1,150 2
Slide 51: Venezuelan Gasoline Components Exports to the U.S.
0Venezuelan Jan-05 Sep-11 Jan-12 May-12 Jan-13 Sep-12 May-13 Source: 5150100Components May-05 and Diesel EIA, Products Sep-13 150Exports 200 November Blending Sep-05 250to Gasoline 300 the Jan-06 Gasoline 2013 350 U.S.400 May-06 MBPD Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep
Slide 52: U.S. Gasoline Exports
U.S. Strong 700 500 Europe 600 Other 300 Canada 02400 100 200 Note: Source: 52 005Latest 12 Other Gasoline 2006 Gasoline demand Month DOELatin 42007 Wk Petroleum Exports Moving represents from America 2008 avg Latin estimate 2009 by Average, Supply Mexico Destination all America, 2010 finished (Fini
Slide 53: U.S. Gasoline Imports
U.S. –Gasoline 12 1400 1200 02800 Note: Source: 53 005 Shutdown Month 600 Gasoline Europe Other 2006 Gasoline DOE 400 imports Moving 2007 Latin of 200 Petroleum Imports the represents 2008 America have Average, Atlantic 2009 by declined Supply Source all Canada Basin 2010 MBPD finished steadily Mont
Slide 54: U.S. Diesel Exports
U.S. Diesel 1400 1200 Other Mexico 800 02Latest 200 400 Source: 54 005Diesel 12 2006 1000 Latin 4exports DOE 600 Wk Month 2007 Europe America Exports Canada avg Petroleum toMoving 2008 estimate Latin by2009 America Destination Average, Supply 2010have Monthly 2011 MBPD exceeded 2012 with 2013 data e
Slide 55: The International Transition of U.S. Refining
–The International Valero’s MMBPD U.S. 21 20 19 16 Exports 17 Net 18 1996 14 15 Note: 55Large (Refined Implied Imports transition Shifted Petroleum 1998 Implied quantities share U.S. 2000 Production Product to demand of production Demand Net Demand 2002 the U.S. ofExporter Demand) U.S. U.S. has expo
Slide 56: U.S. Shifted to Net Product Exporter
U.S. –As MBPD Imports Exports Net -2,000 1991 Note: 56Diesel Gasoline a-1,500 1,000 Shifted result 1993 Gasoline -2,500 2,000 1,500 -1,000 net 500 1995 Other of net and exports tothe 0imports Net blendstocks represents -500 1997 Diesel continued Exporter remain 1999 have Gasoline allare strong, 2001
Slide 57: U.S. Product Exports to Latin America and Europe
U.S.1.0 Latin 2.0 2.5 3.0 (Gulf PADD 0.5 1.0 MMBPD 2013 3.5 1.5 2005 0.0 Source: 57 PADD 12 Competitively has Gulf 2006 America Coast) Month V II 0.5 DOE become PADD U. Coast III 2007 S.Petroleum Moving continues Product (PADD I2008 a net Exporting 2009 Average exporter Exports III) Supply to be 201
Slide 58: Ethanol Operating Income to EBITDA Reconciliation
2Q09 Ethanol Operating + = expense 58Depreciation EBITDA – (millions) Reconciliation Income $183and $245 $165 4Q09 amortization $435 of $209 2010 Operating $(5) $396 2011 $18 $536 $(47) 2012 Income $36 $491 $39 2013 to$42 EBITDA $45
Slide 59: Investor Relations Contacts
Investor For Ashley Vice Karen Manager, John Executive 59 more President, Locke Ngo Smith, Relations information, Investor Director, CFA, Investor Relations Contacts Investor CPA please Relations Relations 210.345.4574 contact: 210.345.2744 – VLP karen.ngo@valero.com 210-345-3077 ashley.smith@valero