Valero Energy Corporation · NYSE:VLO
Valero Energy — Investor Presentation (June 2009)
23 slides from Valero Energy's investor presentation, Jun 22, 2009
Slide 1: European Investor Presentation June 22-23, 2009
European Investor Presentation June 22-23, 2009
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: Valero Overview
Valero Overview Largest independent refiner in North America 16 refineries in the U.S., Canada, and Caribbean Throughput capacity of 3 million barrels per day One of the nation's largest retail fuel marketers with approximately 5,800 marketing sites One of the nation's largest alternative energy com
Slide 4: Geographically Diverse Operations
Geographically Diverse Operations 3 Valero Marketing Presence Three Rivers, Texas 100,000 bpd capacity 12.4 Nelson complexity Corpus Christi, Texas 315,000 bpd capacity 19.1 Nelson complexity Wilmington, California 135,000 bpd capacity 15.9 Nelson complexity Benicia, California 170,000 bpd capacity
Slide 5: Crude Oil Price Rising Despite Weak Fundamentals
Crude Oil Price Rising Despite Weak Fundamentals 4 WTI Cushing (per bbl) 4 Source: Argus weekly averages; 2009 through June 12 Technical signs indicate continued upside Suggesting expectations of economic recovery Financial flows into commodities provide support Hedge for inflation and weak dollar,
Slide 6: Favorable Gasoline Margins on Below-Average Inventory Levels
U.S. gasoline inventories in great shape - - below 2008 and 5-year average Relatively low pump prices helping consumption Latin America pulling volumes from U.S. while Africa and Middle East pulling volumes from Europe Favorable Gasoline Margins on Below-Average Inventory Levels 5 Gasoline margins a
Slide 7: Expect Distillate Margins to Expand with Economic Growth
Valero capturing higher margins on diesel exports Expect long-term demand growth Growing faster than gasoline worldwide Economic growth drives diesel demand Supply options limited Fewer substitutes such as ethanol for gasoline U.S. Gulf Coast On-Road Diesel Crack (vs. WTI, per bbl) Source: Argus wee
Slide 8: Expect Feedstock Discounts to Improve As Crude Oil Demand Grows
Expect Feedstock Discounts to Improve As Crude Oil Demand Grows 7 Sour crude discounts versus light sweet crude oils have narrowed in 2009 OPEC cutting medium sour barrels Continued decline in supply of heavy sour crude oils from Mexico Lower overall light product demand (weak economy) being met by
Slide 9: Return of Economic Growth Increases Global Demand for Oil and Products
Return of Economic Growth Increases Global Demand for Oil and Products Direct relationship between personal income and employment for gasoline demand; and GDP for distillate, petrochemical, and other refined product demand Global project cancellations and delays to contribute to market tightening 8
Slide 10: Oil Consumption Grows with Income
Oil Consumption Grows with Income 9 Sources: Federal Reserve Bank - Dallas Branch; Energy Information Administration, International Monetary Fund; Valero Energy; based on 2007 data
Slide 11: Many Developing Countries Are Approaching Mobility Threshold
Many Developing Countries Are Approaching Mobility Threshold Approaching Mobility Threshold Approaching Mobility Threshold 10 Source: Booz & Company analysis; Note: Each line of symbols represents a 19-year progression for one country, from 1990 through 2008; U.S $. Automobile ownership accelerates
Slide 12: 2Q09 Interim Update
2Q09 Interim Update Due to timing of equity offering, Valero announced on June 2, 2009 that it expects to report a net loss of approximately $0.50 per share for 2Q09 Extended downtime mainly at the Delaware City and McKee refineries Total impact to throughput margin of approximately $200 million Wea
Slide 13: Taking Actions to Improve Profitability
Taking Actions to Improve Profitability 12 Restarted from major turnarounds at McKee (FCC) and Delaware City (coker, gasifier) Adjusting crude diet to increase liquid volume yields Shifting endpoints and conversion to increase gasoline yields Shifting bottoms to higher-margin asphalt market and heav
Slide 14: Improving Competitiveness
Improving Competitiveness Increasing energy efficiency Implemented strategies at nine refineries in 2008/2009 Captured $100 million of estimated total $200 million in annual savings versus not implementing the strategies Program should be fully implemented in mid-2010 Reducing non-energy cash operat
Slide 15: Investing in Key Long-Term Trends
Investing in Key Long-Term Trends Diesel outperforms gasoline Global fuel of choice, especially for developing markets Economic rebound grows diesel demand faster than gasoline But, gasoline still grows worldwide Diesel has fewer substitution threats than gasoline (ethanol) Biofuels are part of the
Slide 16: Ethanol Acquisition
Ethanol Acquisition Acquired 7 ethanol plants out of bankruptcy from VeraSun Energy plus a development site 780 million gallons per year of world-scale capacity $477 million purchase price is 30% of estimated replacement Ethanol will continue to be part of the motor fuels pool and this is our busine
Slide 17: Lower Capital Spending Budget Reflects Buy vs. Build Strategy
Lower Capital Spending Budget Reflects Buy vs. Build Strategy 16 In the current environment, we will continue to seek opportunities to buy high- quality assets at a discount to new-build price 2009 budget estimated at $2.5 billion, down from previous $3.5 billion Will continue to evaluate budget for
Slide 18: Recent Equity Offering
Recent Equity Offering Strengthened balance sheet to manage business through volatile times Weak margin environment affected internally generated free cash flows Combined with March debt issuance of $1 billion, contributed to funding for internal growth projects and attractively priced acquisition t
Slide 19: Shareholder-Focused Company
Shareholder-Focused Company 18 Margin/ barrel billions 1Sour 6-3-2-1 margin consists of feedstocks: 1/3 WTI, 1/3 Mars, and 1/3 Maya; products Gulf Coast 1/2 gasoline, 1/3 ULSD, and 1/6 heavy fuel oil through 2Q estimated Higher margins drove higher operating cash flows and asset values At low valuat
Slide 20: Managing Balance Sheet for Financial Strength
Managing Balance Sheet for Financial Strength Investment-grade credit rating S&P re-affirmed rating and stable outlook Over $5 billion in liquidity as of May 31 $1.3 billion in cash $3.8 billion of credit available, net of letters of credit issued $500 million available on A/R program No borrowings
Slide 21: Committed to Creating Long-Term Shareholder Value
20 Committed to Creating Long-Term Shareholder Value
Slide 22: Appendix
Ay VALERO Appendix
Slide 23: Prudently Investing in Internal Projects: Buy vs. Build
Prudently Investing in Internal Projects: Buy vs. Build In the current environment, we will continue to seek opportunities to buy high- quality assets at a discount to new-build price 22 Refinery Project Estimated Total Cost1 $mm Start-Up Description Memphis FCC Revamp $225 2010 Improve design to in