Slide 1: Holly Corporation Company Update Fall 2007
Holly Corporation Company Update Fall 2007
Slide 2: Disclosure Statement
Disclosure Statement 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 uncertain and necessarily involve ris
Slide 3: Our Mission
Our Mission: Our mission is to be a premier U.S. petroleum refining and wholesale marketing company as measured by superior financial performance and sustainable, profitable growth. We seek to accomplish this by operating safely, reliably and in an environmentally responsible manner, effectively and
Slide 4: Our Values
Our Values: Health & Safety: We put health and safety first. We conduct our business with high regard for the health and safety of our employees, contractors, and neighboring communities. We continuously strive to raise the bar, guided by our stringent health and safety performance standards. Enviro
Slide 5: Holly Corporation Overview
Holly Corporation (NYSE: HOC) Overview Independent refiner in Southwest / Rocky Mountain states 2 refineries: New Mexico & Utah 109,000 barrels a day of refining capacity Wholesale marketer supplying West Texas, Arizona, New Mexico, Colorado, Utah, Nevada, Idaho & Washington In 2004 formed a publicl
Slide 6: Asset Location / Business Footprint
Asset Location / Business Footprint Holly Corporation: Holly's refineries operate in the high margin & high growth Southwest & Rockies markets 109,000 bpd of refining capacity All refineries directly connected to Domestic / Canadian crude trading hubs Extensive crude oil gathering network in West Te
Slide 7: Holly Strengths
Holly Strengths Over 35 years in the refining business Operates in high-growth, high-margin Southwest & Rocky Mountain regions Consistently profitable: never had a loss year in the refining business Management team with an average of over 25 years of industry experience Industry leading return on ca
Slide 8: Holly Strength: Industry Leading Profitability
Holly Strength: Industry Leading Profitability Latest 12 Months1 5-Year Average2 Well positioned financially to support continued growth and success 1Four quarters ended 6/30/07 2Five years ended 12/31/06
Slide 9: Holly Strength: Conservative Balance Sheet
Holly Strength: Conservative Balance Sheet Latest 12 Months1 5-Year Average2 1Four quarters ended 6/30/07 2Five years ended 12/31/06 Well positioned financially to support continued growth and success
Slide 10: Navajo / Woods Cross Refinery Crude Processing Capacity
Navajo / Woods Cross Refinery Crude Processing Capacity 1969 Early 1980's Early 1990's 2003 Wood Cross Acquisiton 2006-07 CURRENT TOTAL NRC Planned Expansion Woods Cross Planned PLANNED TOTAL East 0 16 30 65 75 101 0 111 126 0 West 16 14 35 10 26 10 111 15 5 131 0 16k bpd 15k bpd 30k bpd 14k bpd 10k
Slide 11: Capital Spending Plan
Capital Spending Plan - - Elements of both Offense & Defense: Expanding refining capacity 19% by 2009 - --from 109,000 bpd to 131,000 bpd Increasing cost-advantaged crude mix by over 37% by 2010* - --from 5,000 bpd to 55,000 bpd All projects to take advantage of growing markets in the Southwest and
Slide 12: Navajo Refinery: Expansion and Feedstock Flexibility
Navajo Refinery: --Expansion and Feedstock Flexibility Project Summary: Overall project expected to be completed in two phases. Phase I: Expand crude capacity to approximately 100,000 bpd (Q1 '09) Revamp existing crude unit, new gas oil hydrocracker, new hydrogen plant Increases crude thruput capabi
Slide 13: Woods Cross Refinery: Expansion and Feedstock Flexibility
Woods Cross Refinery: --Expansion and Feedstock Flexibility Project Summary: Expand refinery by 19% to 31,000 bpd Install new gas oil hydrocracker, add Black Wax desalter, and expand sulfur recovery capacity Feed stock flexibility to process up to 15,000 bpd of Black Wax or 10,000 bpd Black Wax & 5,
Slide 14: UNEV Pipeline: Salt Lake City to Las Vegas
UNEV Pipeline: --Salt Lake City to Las Vegas Project Summary: 400 mile 12" pipeline Initial capacity approximately 60,000 bpd, expandable to approximately 120,000 bpd 2 Terminal locations: North Las Vegas and Cedar City, UT 180-day option to purchase1 is planned to be granted to Holly Energy Partner
Slide 15: Projected Capital Expenditures by Year
Projected Capital Expenditures by Year Capital Projects: 2007 2008 2009 Total NRC expansion and feedstock flexibility 80 100 45 225 Phase I - Expansion 75 80 9 164 Phase II - Feedstock Flexibility 5 20 36 61 WX expansion and feedstock flexibility 40 50 10 100 Sulfur recovery unit at NRC 14 10 --- 24
Slide 16: Capital Projects Impact on Pro Forma Annual EBITDA
Capital Projects Impact on Pro Forma Annual EBITDA (full year) Major Capital Projects Total Cost '03-'05 Prices '06 Prices NRC expansion and feedstock flexibility: $225 $126 $275 Phase I -- Expansion $164 $74 $139 Phase II - Feedstock Flexibility $61 $52 $136 WX expansion and feedstock flexibility $
Slide 17: Holly Outlook
Holly Outlook
Slide 18: Holly EBITDA - Estimated Additions from Capital Projects
HOLLY EBITDA - Estimated Additions from Capital Projects 2003 2004 2005 2006 East 112.3 178.1 302 414 Using '03-'05 Avg. Prices: 2008 2009 2010* NRC expansion and feedstock flexibility Phase I --- 74 74 Phase II --- --- 52 WX expansion and feedstock flexibility 8 31 31 8 105 157 HOC Historical EBITD
Slide 19: Cash Flow Summary - 2006
Cash Flow Summary - 2006 Beginning Cash (12/31/05) Cash from Ops Proceeds from sale of Montana refinery Stock Buyback Capex Dividends Other net positive cash flow Ending Cash (12/31/06) 255 245 49 175 120 15 17 256 $Millions Note: Cash includes cash and marketable securities.
Slide 20: Cash Flow Summary - YTD thru June 2007
Cash Flow Summary - YTD thru June 2007 ($ in Millions) YE 2006 Ops Cash Dist fr HEP Stock Buyback Capex Dividends Other Ending Cash 06/30/07 Note: Cash includes marketable securities. 12/31/2006 Cash from Operations HEP Distribution Stock Buyback Capex Dividends Other 06/30/2007
Slide 21: Holly Financial Strength Highlights
Holly Financial Strength Highlights Cash balance as of 6/30/07*: $411 million No debt Stock repurchase program Total of $500 million authorized to repurchase Thus far have repurchased 10.3 million shares for a total of $350 million Average cost of repurchases: $34.10 / share Strong base from which t
Slide 22: Holly Opportunities: Expanded Footprint in Southwest / Rocky Mountain States
Holly Opportunities: Expanded Footprint in Southwest / Rocky Mountain States Longhorn Current:1 109,000 bpd of refining capacity Operate in the high margin & high growth Southwest & Rockies markets Can process approx. 80,000 bpd of price advantaged crude feedstock Future: 131,000 bpd of refining cap
Slide 23: Concluding remarks
Strong management team Strong financial fundamentals Strong industry fundamentals Favorable comparison to peer group metrics Operates in high margin, high growth markets Demonstrated growth ability Capital initiatives to continue growth in place Industry leading return on capital Concluding remarks
Slide 24: Holly Corporation contact details
Holly Corporation 100 Crescent Court, Suite 1600 Dallas, Texas 75201 (214) 871-3555 Steve McDonnell, VP-Chief Financial Officer M. Neale Hickerson, VP-Investor Relations www.hollycorp.com
Slide 25: Appendix
Appendix
Slide 26: Holly Corporation Overview
Holly Corporation (NYSE: HOC) Overview Noted by Forbes* magazine as #1 in the Oil & Gas Sector for earnings per share growth - averaging over 52% per year in each of the last 5 years (2002- 2006) *Forbes: "America's Best Big Companies", January 8, 2007
Slide 27: Project Changes: Navajo Refinery
Project Changes: From initial consideration to current plan April 2006 August 2007 Navajo Refinery: CAPEX $240MM $225MM Crude rate 100K BPD 100K BPD Light/Heavy Diff. Capture 20K BPD 40K BPD Timing 3rd Q 2008 Q1 2009 (Phase I) 2010 (Phase II)* Scope: New Crude Unit 30K BPD Rose Unit Revamp Crude Uni
Slide 28: Project Changes: Woods Cross Refinery
Project Changes: From initial consideration to current plan April 2006 August 2007 Woods Cross Refinery: CAPEX $60MM $100MM Crude rate 30K BPD 31K BPD Canadian Crude 20K BPD 5K BPD Black Wax Crude 0K BPD 10K BPD Timing 3rd Q 2008 4th Q 2008 Scope: Gas Oil Hydrotreating Expand SDA & Crude Unit Gas Oi
Slide 29: Tax Benefits
Tax Benefits American Jobs Creation Act of 2004: Created tax incentives for small refiners to produce ULSD Provides immediate deduction of 75% of certain capital costs Provides a tax credit based on ULSD production up to 25% of these costs Energy Policy Act of 2005: Provides an election to expense 5
Slide 30: Sulfur Credits Benefit
Sulfur Credits Benefit Benefits to Holly: Can use as needed in future years. Can monetize if not used internally. In 2006, Holly sold 99,681 credits for a total of approximately $16 million In 2007, Holly has sold 50,000 credits for approximately $8 million Credit Generation: Compliance with Low Sul
Slide 31: NRC Refining Margins
NRC Refining Margins Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec East 3.9 5.21 7.33 6.46 4.92 5.48 5.79 5.73 5.1 6.64 6.2 3.41 West 1.67 3.99 4.05 8.09 10.88 6.41 4.02 4.5 3.77 2.04 1.59 2.07 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 3.63 1.27 7.47 7.48 8.97 11.1 13.42 4.39 13.89 14.33 3.5
Slide 32: Woods Cross Refining Margins
Woods Cross Refining Margins Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec East -1.09 1.21 5.65 4.32 6.98 2.33 2.87 3.93 -0.67 -0.95 4.97 0.57 West 2.32 2.01 2.74 8.68 5.88 1.93 4.82 4.09 10.38 5.44 2.56 4.08 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.97 9.57 5.61 2.8 8.63 17.42 7.97 21.99
Slide 33: Definitions
Definitions BPD: the number of barrels per day of crude oil or petroleum products. Catalytic reforming: a refinery process which uses a precious metal (such as platinum) based catalyst to convert low octane naphtha fractionated directly from crude oil to high octane gasoline blendstock and hydrogen.
Slide 34: Definitions
Definitions LSG: gasoline that contains less than 30 PPM of total sulfur. MMSCFD: million standard cubic feet per day. PPM: parts-per-million. Refining gross margin or refinery gross margin: the difference between average net sales price and average costs of products per barrel of produced refined p