Hf Sinclair Corporation · NYSE:DINO
Hf Sinclair — HollyFrontier — RBC Global Energy Conference 2015
32 slides from Hf Sinclair's conference presentation, Jun 1, 2015
Slide 1: Investor Presentation, RBC Global Energy Conference June 2015
Investor Presentation R B C G l o b a l E n e r g y C o n f e r e n c e J U N E 2 0 1 5
Slide 2: HollyFrontier Corporation Disclosure Statement
Hol lyF ront ie r Corpora t ion D isc losure S ta tement 2 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
Slide 3: Our Mission and Values
OUR MISSION OUR MISSION IS to be the premier U.S. petroleum refining, pipeline and terminal company as measured by superior financial performance and sustainable, profitable growth. WE SEEK TO ACCOMPLISH THIS BY: • Operating in a safe, reliable and environmentally responsible manner, • Efficiently o
Slide 4: Footprint of HollyFrontier and Holly Energy Partners
FOOTPR INT OF HOLLYFRONTIER AND HOLLY ENERGY PARTNERS Pure play inland refining company with 443,000 barrels per day of crude capacity Proximity to North American crude production and attractive niche product markets Collaboration with HEP provides strategic growth opportunities in logistics and mar
Slide 5: Achievements and Objectives
ACHIEVEMENTS AND OB JECTIVES ACHIEVEMENTS • Geographically advantaged inland refining system created with 2011 HollyFrontier merger • Enhanced operating procedures and practices implemented across refining system • Among the first independent refiners to launch an MLP in 2004 • Leader in returning c
Slide 6: HollyFrontier Investment Highlights
HOLLYFRONTIER INVESTMENT H IGHL IGHTS Safe and reliable operations Continued system integration to drive profitability OPERATIONS 6 Internal investment to drive growth and enhance returns Liquid yield improvement and de-bottlenecking opportunities CAPITAL PROJECTS Maintain investment grade rating Ta
Slide 7: Operational Reliability
OPERATIONAL REL IAB IL ITY Reliability Initiatives • Enhanced operating procedures and practices • Risk-based inspection program implementation • Occupational and process safety management teams • Operational integrity and training • Critical heat exchanger modernization • Cheyenne plant air system
Slide 8: Proximity to North American Crude Production
• Refinery location and configuration enables a fleet-wide crude slate discounted to WTI • Highly flexible refining system allows feedstock optionality • Discounted feeds drive higher gross margins / barrel and ultimately, EBITDA PROXIMITY TO NORTH AMERICAN CRUDE PRODUCTION 8 -$12 -$10 -$8 -$6 -$4 -
Slide 9: Investing to Drive Growth and Enhance Returns
INVEST ING TO DRIVE GROWTH AND ENHANCE RETURNS C U R R E N T A N D P O T E N T I A L G R O W T H I N I T I A T I V E S Internal Growth Initiatives Approximately $300M in capital growth projects underway to contribute an estimated $175M in annual EBITDA beginning in 2016 CRUDE SLATE OPTIMIZATION LIQU
Slide 10: El Dorado Naphtha Fractionation
10 El Dorado Naphtha Fractionation • The Naphtha Splitter tower separates light Naphtha and Iso-pentane from the reformer and isomerization feed using them as gasoline blending components • Reduces benzene in gasoline for MSAT II compliance by selecting only heavier Naphtha for reformate production
Slide 11: Woods Cross Expansion Phase
11 Woods Cross Expansion Phase 1 • Expand crude capacity from 31,000 to 45,000 barrels per day • Includes relocation/revamp of FCC and polymerization units from Bloomfield, NM refinery • Crude slate to include up to 25,000 BPD local Uinta Basin Black Wax or other regional crudes. 20,000 BPD 10-year
Slide 12: Cheyenne Hydrogen Plant
12 Cheyenne Hydrogen Plant • The Cheyenne Plant is currently Hydrogen- limited, which increases reformer runs, limits diesel production and reduces potential heavy crude charge rates • The project will install a 10MMscfd hydrogen plant and shut down an inefficient 4MMSCFD Hydrogen plant • Economic r
Slide 13: Tulsa Refinery Modernization: FCC Revamp
13 Tulsa Refinery Modernization: FCC Revamp • The Tulsa East and West refineries were acquired by Holly in 2009 for approximately $200m** inclusive of inventory • Crude Distillation capacity of the combined facility exceeds the current nameplate capacity agreed upon in 2009 until specified improveme
Slide 14: Balance Sheet
BALANCE SHEET • Investment Grade Rating • Moody’s Baa3 • S&P BBB- • $1.0 billion cash as of 3/31/15 • $187 million outstanding debt as of 3/31/15 • excludes non-recourse HEP debt • Total debt to capital ratio 3% as of 3/31/15 • $1.0 billion share repurchase program replacing all prior programs 14 *
Slide 15: Disciplined Approach to Capital Allocation
DISC IPL INED APPROACH TO CAPITAL ALLOCATION RETURN EXCESS CASH TO SHAREHOLDERS: SUSTAINING CAPITAL: GROWTH CAPITAL: 15 • Committed to maintaining both a competitive dividend yield and total cash yield relative to our peer group • $1b February 2015 repurchase authorization to be executed in 12 to 18
Slide 16: Strong Track Record of Cash Returns
STRONG TRACK RECORD OF CASH RETURNS Since the July 2011 merger HFC has returned approximately $2.9 billion, or approximately $14.87 per share to shareholders 16 • Industry leader in returning excess cash to shareholders • Committed to maintaining competitive dividend and cash yield versus peers • In
Slide 17: Strong Financial Metrics vs Peers
STRONG F INANCIAL METR ICS VS PEERS HFC earnings per bbl strongest in peer sector (2010 – 2014) 17 Net Income per Barrel of Crude Capacity 5.52 4.86 4.43 4.34 2.28 2.20 1.84 0.15 0.07 -6.00 -4.00 -2.00 0.00 2.00 4.00 6.00 8.00 10.00 12.00 HFC* WNR MPC PSX VLO DK TSO ALJ PBF Regular Cash Yield* 2010
Slide 18: Best in Class Returns on Capital Employed
BEST IN CLASS RETURNS ON CAPITAL EMPLOYED Pro Forma HollyFrontier Returns on Invested Capital (Average 2010-2014) 18 *HFC Ex-LOCM $397mm pre-tax charge in 2014 5-year average ROCE calculated by taking the average of ROCE’s for the years 2010-2014. ROCE calculated as net income divided by the sum of
Slide 19: Holly Energy Partners Investment Highlights
HOLLY ENERGY PARTNERS INVESTMENT H IGHL IGHTS LONG TERM CONTRACTS SUPPORT CASH FLOW STABILITY WELL POSITIONED ASSETS THAT SERVE HIGH GROWTH MARKETS SUCCESSFUL EXECUTION OF GROWTH PLAN HAS RESULTED IN CONSISTENT DISTRIBUTION INCREASES FEE BASED REVENUES WITH NO COMMODITY RISK; REVENUE SOURCES INCLUDE
Slide 20: Holly Energy Partners Partnership Growth
20 HOLLY ENERGY PARTNERS P A R T N E R S H I P G R O W T H Organic Growth • Increase cash flow via logical additions to existing assets, volume growth and annual contractual PPI-related revenue growth • Southeastern New Mexico Crude Gathering Expansion • UNEV volume growth HFC Growth • Partner with
Slide 21: Holly Energy Partners Expected Visible Growth
HOLLY ENERGY PARTNERS E X P E C T E D V I S I B L E G R O W T H 21 (1) Estimate based on additional 15,000 bpd at incentive rate to Las Vegas plus customary terminaling revenue following Salt Lake City refinery expansions; approximately 25% of $15mm revenue run-rate is expected in 2015 with 100% exp
Slide 22: HEP Growth: Cash Distributions Since Inception
HEP GROWTH: CASH DISTR IBUTION S INCE INCEPTION 22 *CAGR=Compound Annual Growth Rate **Q4 2013 through Q3 2014 quarterly LP and GP distributions announced and paid in 2014. $35 $44 $49 $54 $68 $86 $99 $126 $144 $158 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 2005200620072008200920102011201220132014
Slide 23: Value of HFC's LP & GP Interests in HEP
VALUE OF HFC’S LP & GP INTERESTS IN HEP 23 Methodology: • GP values are equal to quarterly GP cash flow on an annualized basis minus the $5m GP giveback for the a period of 3 years (as part of the HEP UNEV purchase transaction) times the above range of commonly used market multiples. These values do
Slide 24: HollyFrontier Corporation contact details
HollyFrontier Corporation (NYSE: HFC) 2828 N. Harwood, Suite 1300 Dallas, Texas 75201 (214) 954-6510 www.hollyfrontier.com 24 Julia Heidenreich, VP, Investor Relations Craig Biery, Investor Relations investors@hollyfrontier.com 214-954-6510
Slide 25: Appendix
APPENDIX 25
Slide 26: HollyFrontier Index
HOLLYFRONTIER INDEX 26 Please see p. 31 for disclaimer and www.HollyFrontier.com/investor-relations for most current version.
Slide 27: HollyFrontier Enterprise Value
HOLLYFRONTIER ENTERPR ISE VALUE Shares Outstanding* 196 Price per Share* $42.06 Market Cap 8,231 Less: Cash* (1,039) Add: Total Debt* 1,055 Less: HEP Debt** (868) Add: Minority Interest 577 Enterprise Value 7,956 Less: HEP GP Value*** (730) Less: HEP LP Value*** (762) Implied Refining EV 6,464 *As o
Slide 28: Logistics Matter
LOGIST ICS MATTER 28 Proximity to Crude Oil Pricing Hubs and Takeaway Infrastructure Prices reflect estimated transportation cost per barrel via pipeline, rail and marine Sources: Barclays, Credit Suisse, Deutsche Bank, Macquarie, and Tudor Pickering Holt
Slide 29: Financial Metrics
F INANCIAL METR ICS* 29 *HollyFrontier Corporation debt excludes HEP debt. All amounts are based on publicly-available financial statements, which we have assumed to be accurate. *HFC Net Income/BBL and ROCE calculation is Ex-LOCM $397mm pre-tax charge in 2014 2001 2002 2003 2004 2005 2006 2007 2008
Slide 30: Definitions
DEF IN IT IONS Non GAAP 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 n
Slide 31: HFC Index Disclosure
HFC INDEX D ISCLOSURE The data on p. 26 is for informational purposes only and is not reflective or intended to be an indicator of HollyFrontier's past or future financial results. This data is general industry information and does not reflect prices paid or received by HFC. The data was compiled fr
Slide 32: HollyFrontier
ar HOLLYFRONTIER.