Hf Sinclair Corporation · NYSE:DINO
Hf Sinclair — Holly — Citigroup Small / Mid-Cap Conference March 2007
29 slides from Hf Sinclair's conference presentation, Mar 13, 2007
Slide 1: Holly Corporation Citigroup Small / Mid-Cap Conference March 2007
Holly Corporation Citigroup Small / Mid-Cap Conference March 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: Presentation Topics
Overview of Holly Corporation Holly Strengths History and experience in refining business Experienced management team Strong financial metrics compared to peers Holly's Commitment to Growth / Investment Refining growth in Southwest Recently completed refining projects Refining projects under way Hol
Slide 4: Overview of Holly Corporation
Overview of Holly Corporation
Slide 5: 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 6: Holly Corporation Overview
Holly Corporation (NYSE: HOC) Overview Independent refiner in Southwest / Rocky Mountain states Own 2 refineries: New Mexico & Salt Lake City Wholesale marketer supplying West Texas, Arizona, New Mexico, Colorado, Utah, Nevada, Idaho & Washington Also built extensive logistics operations (pipelines
Slide 7: Asset Location / Business Footprint
Asset Location / Business Footprint Holly Corp: Holly's refineries operate in the high margin & high growth Southwest & Rockies markets 109,000 bpd of refining capacity All HOC refineries directly connected to Domestic / Canadian crude trading hubs Extensive crude oil gathering network in West Texas
Slide 8: Holly Strengths
Holly Strengths
Slide 9: Holly's History in the Refining Business
Holly's History in the Refining Business 35+ years in the refining business Acquired refinery in Artesia, NM-expanded 4 times since 1969 purchase Acquired refinery in Woods Cross, UT in 2003 Have built extensive logistics operations (pipelines and terminals) to deliver refined products to end market
Slide 10: Experienced Management Team
Experienced Management Team Executive officer group averages over 25 years of refining and marketing industry experience Holly and subsidiary officer group averages over 20 years of refining/energy industry experience Holly directors average over 20 years of refining industry experience Dedicated ma
Slide 11: Strong Financial Metrics vs. Peers
Strong Financial Metrics vs. Peers Compared to industry peers: Highest return on invested capital1 Lowest debt to equity ratio2 Well positioned with strong financial metrics to support continued growth and success 1 As measured for 2001-2005 time period and on 12 month basis (July 1, 2005 thru June
Slide 12: Holly's Commitment to Growth and Investment
Holly's Commitment to Growth and Investment
Slide 13: 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 75k bpd 65k bpd 30k bpd 10k
Slide 14: Expansion and Feedstock Flexibility - Navajo Refinery
Expansion and Feedstock Flexibility -- Navajo Refinery: Board approved 2/9/2007 (including components approved 12/8/2006) Project Summary: Overall project expected to be completed in two phases. Phase I: Expand crude capacity to approximately 100,000 bpd (4Q '08) Revamp existing crude unit, new gas
Slide 15: Expansion and Feedstock Flexibility - Woods Cross Refinery
Expansion and Feedstock Flexibility - Woods Cross Refinery: Board approved 12/8/2006 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
Slide 16: Projected Capital Expenditures by Year
Projected Capital Expenditures by Year Capital Projects: 2007 2008 2009 NRC expansion and feedstock flexibility 80 100 45 Phase I - Expansion 75 80 9 Phase II - Feedstock Flexibility 5 20 36 WX expansion and feedstock flexibility 40 50 10 Sulfur recovery unit at NRC 14 10 --- Small payout projects 2
Slide 17: 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 18: Holly Outlook
Holly Outlook
Slide 19: 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 2010/11* 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 EB
Slide 20: 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 21: Holly Financial Strength Highlights
Holly Financial Strength Highlights Cash balance as of 12/31/06*: $256 million No debt Stock repurchase program Total of $400 million authorized to repurchase Thus far have repurchased 9.5 million shares for a total of $307 million Average cost of repurchases: $32.28 / 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: Benefits from tax legislation Sulfur credits Definitions
Slide 26: 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 27: 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 Credit Generation: Compliance with Low Sulfur gasoline for small refiners, including Holly, not required until
Slide 28: 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 29: 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
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