Valero Energy Corporation · NYSE:VLO
Valero Energy — Non-Deal Roadshow (August 2007)
13 slides from Valero Energy's roadshow presentation, Aug 27, 2007
Slide 1: Management Presentation August 27-28, 2007
Management Presentation August 27-28, 2007
Slide 2: Refining Fundamentals Strong as Demand Keeps Growing
Refining Fundamentals Strong as Demand Keeps Growing MBPD U.S. Demand MBPDMMBPD Global Petroleum Demand 9,4004,300 88 Gasoline 9,20085 4,100 9,00083 Distillate 8,80080 3,900 8,60078 8,4003,700 75 2001 2002 2003 2004 2005 2006 2007E2001 2002 2003 2004 2005 2006 2007E Source: U.S. Department of Energy
Slide 3: New Era of Refining Filled with Challenges
New Era of Refining Filled with Challenges More stringent fuel More refining specifications Growth in units, more and regulationsvariety of fuels complicated and operationsblendstocks Construction costs higher Logistics and durations bottlenecks longer Recurring U.S. more unplanned reliant on refine
Slide 4: Spare Refining Capacity Expected to Remain Tight
Spare Refining Capacity Expected to Remain Tight MMBPD 3.0 Petroleum Demand Growth 2.5CDU Capacity Growth Conversion Capacity Growth 2.0(Coker, FCC, HCU) 1.5 1.0 0.5 0.0 2004 2005 2006 2007E 2008E 2009E Source: Industry reports and Valero forecasts Difficult for refining capacity to keep up with dem
Slide 5: Strong Fundamentals Driving Refining Margins
Strong Fundamentals Driving Refining Margins Per Barrel $25Gulf Coast 3-2-1 East Coast 3-2-1 $20Mid-Con 3-2-1 West Coast 3-2-1 $15 $10 $5 $0 200120022003200420052006 2007E Sources: Historical data Platt’s; 2007 estimate based on historical data and Valero forecast Expect margins to remain high • Per
Slide 6: Canadian Heavy Sour Crude Oil Heading to Gulf Coast
Canadian Heavy Sour Crude Oil Heading to Gulf Coast MBPD Canadian Heavy Crude Supply 2,500 Canadian heavy sour supply rapidly increasing 2,000 Forecast to grow from 1.25 to 2.25mmbbls/day by 2015 1,500 1,000 500 0 2007 2009 2011 2013 2015 Source: CAPP Multiple pipeline and logistics projects in prog
Slide 7: Feedstock Discounts Favorable for Heavy Sour Refiners
Feedstock Discounts Favorable for Heavy Sour Refiners Per BarrelFeedstock DiscountsEstimated Quality of Reserves (2006) $18 Maya Mars Light Sweet $1220% High Acid 2% Sour 13%66% $6Heavy Sour $0 200120022003200420052006 2007 E Sources: Historical data Platt’s; 2007 estimate based on historical data a
Slide 8: Valero's Strategy
Valero’s Strategy Invest in value-added, growth projects at flagship and niche refineries • Focus on sour-up, heavy-up, and product upgrading projects • Leverage core strengths to adjacent markets Improve operations • Achieve $1 billion in annual operating income improvements over next 5 years • Hig
Slide 9: Using Balanced Approach to Allocate Cash
Using Balanced Approach to Allocate Cash Billions Cumulative Allocations 2005-2007E $15 More balanced approach to allocating cash $10 Buybacks in 2007 • Purchased 64 million shares with Net Acquisitions and $4.4 billion YTD $5Growth Capital • Intend to continue share buybacks Buybacks and Dividends
Slide 10: Appendix
Appendix
Slide 11: Valero Operations Map
Valero Operations Map Quebec, Canada • 215,000 bpd capacity Benicia, California • 170,000 bpd capacity Paulsboro, New Jersey • 195,000 bpd capacity Delaware City, Delaware Wilmington, California • 210,000 bpd capacity • 135,000 bpd capacity McKee, Texas • 170,000 bpd capacity Memphis, Tennessee • 19
Slide 12: Margins and Days of Supply
Margins and Days of Supply Gulf Coast Gasoline Margin (per bbl)Gulf Coast Diesel Margin (per bbl) $40$20 $352007 2007 $30$15 2006 $25 2006 $20$10 $15 $10$5 5-Yr Avg5-Yr Avg $5 $0$0 JanAprJulOctJanAprJulOct Source: Platts conventional unleaded 87; 2007 data through August 17Source: Platts; 2007 data
Slide 13: 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