Valero Energy Corporation · NYSE:VLO
Valero Energy — Credit Suisse Energy Summit 2009
21 slides from Valero Energy's conference presentation, Feb 5, 2009
Slide 1: Credit Suisse Energy Summit February 5, 2009
Credit Suisse Energy Summit February 5, 2009
Slide 2: We Need an Economic Recovery
We Need an Economic Recovery 3 Source: Cass Freight Systems Source: U.S. Bureau of Labor Statistics
Slide 3: Demand Has Weakened Substantially
Demand Has Weakened Substantially 5 Near-term demand weakness creating spare capacity Projects getting canceled and deferred Threat to less competitive refiners Leading to bankruptcies and potential closures Source: Industry reports and Valero forecast; 2008 through 2013 estimates are based on consu
Slide 4: Expect OPEC Cut on Relatively Low Crude Oil Prices
Expect OPEC Cut on Relatively Low Crude Oil Prices 7 WTI Cushing (per bbl) 7 Source: Argus weekly averages; 2009 through January 30 Crude oil market looking for support 2009 economic activity very weak Huge worldwide stimulus being applied Expect OPEC to cut again Low crude oil prices good for the e
Slide 5: Gasoline Supply Capacity in Surplus Relative to Demand
U.S. gasoline inventories in good shape - near 5-year average Refiners reducing utilization of gasoline making units FCCs and reformers Valero taking extra units down during planned maintenance Lower pump prices helping demand recovery Gasoline Supply Capacity in Surplus Relative to Demand 9 Gulf co
Slide 6: Distillate Margins Continue To Be Favorable
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 Gulf Coast On-Road Diesel Crack (vs. WTI, per bbl) Source: Argus weekly averages; 2009 through January 27; LSD prior to May
Slide 7: Expect Feedstock Discounts to Improve
Expect Feedstock Discounts to Improve 13 Crude discounts vs. WTI recently narrowed WTI's recent weakness and steep contango - Cushing issue OPEC cutting medium sour barrels Compared to LLS, discounts still good Longer-term, cancellations and deferrals of cokers and upgraders reduce demand for heavy
Slide 8: Why Own Valero?
Why Own Valero? Larger, More Complex, Lower-cost Refineries Strong Financial Position Continuing to Invest in Growth Projects with Disciplined Capital Program Shareholder-Focused Company Improving Competitiveness 15
Slide 9: Valero's Refineries Are Larger and More Complex
Valero's Refineries Are Larger and More Complex 17 Source: Oil and Gas Journal, PIRA, and Valero estimates Smallest, least complex refineries in lower-left quadrant: total of 75 refineries and 3.3 million barrels per day of CDU capacity Valero's average CDU capacity is 160,000 barrels per day and co
Slide 10: Valero Has Lowest Cost per Barrel
Valero Has Lowest Cost per Barrel Cash Operating Expense per Barrel for Independent Refiners1 12008 1Q through 3Q refining operating expense excluding depreciation and amortization divided by refinery throughput volumes; data per company filings and Valero estimates
Slide 11: Strong Financial Position
Strong Financial Position Investment-grade credit rating Upgraded a notch by Moody's in 4Q08 S&P and Moody's re-affirmed rating in January Over $5 billion in liquidity at year-end $940 million in cash $4.7 billion of credit available, net of letters of credit issued No borrowings on credit facilitie
Slide 12: Continuing to Invest in Growth Projects with Disciplined Capital Program
Continuing to Invest in Growth Projects with Disciplined Capital Program 23 2009 budget estimated at $2.7 billion, down from previous $3.5 billion Will continue to evaluate budget for additional reductions Non-strategic workload declining as legacy issues addressed Strategic capital focused on flags
Slide 13: Shareholder-Focused Company
Shareholder-Focused Company 25 Stock Buybacks Reduced Sharecount In 2008, purchased 23 million shares, reducing share count by 4% Since early 2006, have reduced share count by 21% In 2009, plan is to conserve cash Dividend Growth At stock price of $23/sh., 2.5% yield using last 4 quarters of dividen
Slide 14: Improving Competitiveness
Improving Competitiveness 27 In early 2007, identified gaps of approximately $1 billion of annual operating income Assessed refining system based on 2006 Solomon Survey results and prices Developed initiatives to close gaps Reliability a main focus via "Commitment to Excellence Management System" $5
Slide 15: Improving Competitiveness
Improving Competitiveness Improving reliability Implementing standards for consistent, world-class operations No cracks in Port Arthur coke drums since repair in spring 2008 Increasing energy efficiency Implemented strategies at six refineries in 2008 and already achieving savings Reducing maintenan
Slide 16: Stock Price Same as Early 2005, But Much Stronger Company Now
Stock Price Same as Early 2005, But Much Stronger Company Now Then Now Cash (millions) $846 $940 Additional Available Liquidity (billions) $1.5 $4.7 Debt-to-Cap Ratio, net of cash 30.7% 26.2% Average Refinery Throughput Capacity (MBPD) 164 188 Total Refining Throughput Capacity (MMBPD) 2.5 3.0 31
Slide 17: Committed to Creating Long-Term Shareholder Value
Committed to Creating Long-Term Shareholder Value Long-Term Shareholder Value Long-Term Shareholder Value 33
Slide 18: Appendix
AW VALERO Appendix
Slide 19: Refining Portfolio
Refining Portfolio 37 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 15.0 Nelson co
Slide 20: Prudently Investing in Strategic Growth Projects
Prudently Investing in Strategic Growth Projects 39 Refinery Project Estimated Total Cost1 $mm Start-Up Description Port Arthur Hydro-cracker/ Crude $1,700 3Q11 New hydrocracker - 50 mbpd estimated Crude expansion - unlock up to 75 mbpd existing capacity St. Charles Crude/ Coker $250 1Q10 Crude unit
Slide 21: Safe Harbor Statement
Safe Harbor Statement 41 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