Valero Energy Corporation · NYSE:VLO
Valero Energy — Investor Presentation (March 2016)
31 slides from Valero Energy's investor presentation, Mar 18, 2016
Slide 1: Investor Presentation March 2016
Investor Presentation March 2016 Exhibit 99.1
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: Who We Are
Who We Are World’s Largest Independent Refiner 15 refineries, 3 million barrels per day (BPD) of high-complexity throughput capacity Greater than 70% of refining capacity located in U.S. Gulf Coast and Mid-Continent Approximately 10,000 employees Operator of Liquids-Focused Logistics Assets General
Slide 4: Strong U.S. Gulf Coast and Mid-Continent Presence
Strong U.S. Gulf Coast and Mid-Continent Presence Refineries and ethanol plants are in advantaged locations See slide 20 for capacities
Slide 5: Current Macro Environment
Current Macro Environment Abundant global supply of crude oil and natural gas Forecasted world GDP growth Structural product shortage in Latin America, Europe, Africa and Eastern Canada Demand response to lower product prices SUPPLY DEMAND North American logistics build out adds efficiency and remov
Slide 6: Safety and Reliability are Imperative for Profitability
Safety and Reliability are Imperative for Profitability See slide 19 in Appendix for notes regarding this slide.
Slide 7: Advantaged Location in U.S. Gulf Coast
Advantaged Location in U.S. Gulf Coast See slide 19 in Appendix for notes regarding this slide. Capacities as of January 1, 2016. Over 55% of our throughput capacity is located in U.S. Gulf Coast Access to low cost natural gas, North American and foreign crudes, deep skilled labor pool Pipeline take
Slide 8: High Complexity Refineries and Lowest Cost Operator
High Complexity Refineries and Lowest Cost Operator See slide 19 in Appendix for notes regarding this slide.
Slide 9: Our Portfolio Facilitates Optimization of Product Exports
Our Portfolio Facilitates Optimization of Product Exports Distillate Gasoline Actual export volumes for 2011 – 2015. See slide 19 in Appendix for notes regarding this slide.
Slide 10: Capital Allocation
Capital Allocation Maintain Strong Balance Sheet (1)Debt-to-cap ratio based on total debt reduced by $2 billion of cash. (2) Payout ratio is the sum of dividends plus stock buybacks divided by net income from continuing operations excluding special items. Sustaining Capex Approximately $1.5 billion
Slide 11: Capital Investments Focused on Maintaining Asset Base, Enhancing Margins, and Growing Logistics
Capital Investments Focused on Maintaining Asset Base, Enhancing Margins, and Growing Logistics Targeting $2.6 billion in 2016 Includes some 2015 carry forward 2016 growth investments allocated approximately 50/50 for logistics and asset optimization Logistics Approximately 95% MLP-eligible Expect c
Slide 12: Investing in Asset Optimization
Investing in Asset Optimization Products & Other Hydrocracker expansions at Port Arthur (completed Oct 2015) and St. Charles (expected in 1H16) estimated to increase distillate yield by approximately 23 MBPD New 13 MPBD Houston alkylation unit expected to startup in 1H19 Projects under development:
Slide 13: Investing to Improve Access to North American Crude
Investing to Improve Access to North American Crude Diamond Pipeline 440 miles of 20-inch pipe (200 MBPD capacity) connecting Memphis to Cushing, expected to startup in 3Q17 Provides supply flexibility and ability to improve crude blend quality Approximately $930 MM total project cost Exercised opti
Slide 14: Our Sponsored MLP Valero Energy Partners
VLO owns entire 2% GP interest, all incentive distribution rights, and a 67.1% of outstanding LP interests High-quality assets integrated with VLO’s system Fee-based, liquids-focused revenue generation with no direct commodity price exposure Our Sponsored MLP Valero Energy Partners (NYSE:VLP) Summar
Slide 15: More Than $1 Billion of Estimated MLP Eligible EBITDA Inventory
More Than $1 Billion of Estimated MLP Eligible EBITDA Inventory Racks, Terminals, and Storage(1) Over 80 million barrels of active shell capacity for crude and products 139 truck rack bays Rail Three crude unloading facilities with estimated total capacity of 150 MBPD 5,320 purchased railcars, expec
Slide 16: Renewables Business
Renewables Business Renewables Operations 11 ethanol plants with 1.4 billion gallons total annual production capacity Low capital investment with scale and location in corn belt Operational best practices transferred from refining Diamond Green Diesel plant 50-50 JV with approximately 11 MBPD of ren
Slide 17: We Believe Valero is an Excellent Investment
We Believe Valero is an Excellent Investment Chart data sources: Bloomberg estimates as of March 7, 2016. See slide 19 in Appendix for notes regarding this slide. We Believe VLO is Undervalued Disciplined management team Strong financial position Favorable macro environment Proven operations excelle
Slide 18: Appendix Contents
Appendix Contents Topic Pages Notes 19 Refining Operating Statistics 20 – 21 Natural Gas Cost Sensitivity 22 Crude Oil Transportation 23 Fundamentals 24 – 27 Valero Energy Partners LP 28 – 30 Investor Relations Contacts 31
Slide 19: Notes
Notes Slide 5 Macro environment themes represent industry consultant views. Slide 6 Contractor total recordable incident rate from U.S. Bureau of Labor Statistics. Tier 1 process safety event defined within API Recommended Practice 754. Industry benchmarking and VLO performance statistics from Solom
Slide 20: Our Refining Capacity and Nelson Complexity
Our Refining Capacity and Nelson Complexity Refinery Capacities (MBPD)(1) Nelson Complexity Index Throughput Crude Corpus Christi(2) 370 275 15.1 Houston 175 90 15.4 Meraux 135 125 9.7 Port Arthur 375 335 12.7 St. Charles 305 215 16.1 Texas City 260 225 11.1 Three Rivers 100 89 13.2 U.S. Gulf Coast
Slide 21: Reliability Initiatives Have Improved Refinery Availability and Enabled Higher Utilization
Reliability Initiatives Have Improved Refinery Availability and Enabled Higher Utilization
Slide 22: U.S. Natural Gas Provides Opex and Feedstock Cost Advantages
U.S. Natural Gas Provides Opex and Feedstock Cost Advantages Natural gas prices year to date as of March 8, 2016 for U.S. and Europe. Estimated per barrel cost of 896,000 mmBtu/day of natural gas consumption at 93% refinery throughput capacity utilization, or 2.8 MMBPD. $750 MM higher pre-tax annual
Slide 23: Pipeline Takeaway Capacity Additions Have Increased Crude Competition
KEY Trunkline 400 Flanagan 600 Pipeline Takeaway Capacity Additions Have Increased Crude Competition in the U.S. Gulf Coast TransCanada Mainline Conversion 1,100 TMX 890 Keystone XL 700 Grand Mesa / Saddlehorn 350 Niobrara Seaway 450 Completed 2014 – 15 2016 or Later Startup Capacities in MBPD. Pipe
Slide 24: Production Growth Provides Resource Advantage to North American Refiners
Production Growth Provides Resource Advantage to North American Refiners Source: DOE, 2015 data through December
Slide 25: Global Petroleum Demand Growth Expected to Outpace Refinery Capacity Expansion
Source: Consultant and Valero estimates. Net Global Refinery CDU Additions = New Capacity + Restarts – Announced Closures. Global Petroleum Demand Growth Expected to Outpace Refinery Capacity Expansion
Slide 26: U.S. Gasoline Exports
Gasoline represents all finished gasoline plus all blendstocks (including ethanol, MTBE, and other oxygenates) Source: DOE Petroleum Supply Monthly data through December 2015. 4 Week Average estimate from Weekly Petroleum Statistics Report and Valero estimates. U.S. Gasoline Exports
Slide 27: U.S. Diesel Exports
Source: DOE Petroleum Supply Monthly data through December 2015. 4 Week Average estimate from Weekly Petroleum Statistics Report. U.S. Diesel Exports 12 Month Moving Average (MBPD)
Slide 28: VLP's Competitive Strengths
VLP’s Competitive Strengths Strong Sponsor Strategic relationship with investment grade sponsor VLO Quality Assets High quality, well maintained assets integrated with VLO’s refineries and located in advantaged regions Stable Revenues Stable and predictable cash flows from long term, fee-based contr
Slide 29: VLP Assets Located in U.S. Gulf Coast and Mid-Continent
VLP Assets Located in U.S. Gulf Coast and Mid-Continent VLP’s assets are integrated with Valero’s refining system (1)Total consideration value. Texas Crude Systems McKee, Three Rivers, Wynnewood July 1, 2014 - $154 mm(1) Houston and St. Charles Terminals March 1, 2015 - $671 mm(1) Corpus Christi Ter
Slide 30: VLP Unit Price Outperformed Peers since 2014
VLP Unit Price Outperformed Peers since 2014 Prices through March 8 close.
Slide 31: Investor Relations Contacts
Investor Relations Contacts For more information, please contact: John Locke Vice President, Investor Relations 210.345.3077 john.locke@valero.com Karen Ngo Manager, Investor Relations 210.345.4574 karen.ngo@valero.com