Valero Energy Corporation · NYSE:VLO
Valero Energy — Howard Weil Energy Conference 2004
12 slides from Valero Energy's conference presentation, Mar 30, 2004
Slide 1: Howard Weil Energy Conference
1 Howard Weil Energy Conference Greg King, President March 30, 2004
Slide 2: Safe Harbor Statement
2 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. It is important to
Slide 3: 2003 Accomplishments
3 2003 Accomplishments Record net income -- $622 million $390 million of operating income from Canadian operations Reduced debt-to-cap ratio from 50% to 40% 53.4% at time of UDS acquisition Acquired St. Charles refinery in July Commissioned coker at Texas City in October Great year for retail and wh
Slide 4: Acquisition of Aruba Refinery
4 Acquisition of Aruba Refinery Completed acquisition on March 5 for $465 million plus 162 million for working capital Financed with $406 million equity and $221 million cash and debt 315,000 BPD heavy sour crude oil refinery Replacement cost of $2.4 billion $640 million invested since 1998 Produces
Slide 5: New Era for Refining
5 -1.00 1.00 3.00 5.00 7.00 9.00 11.00 13.00 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 New Era for Refining Over $5.00/bbl 2% of time Over $5.00/bbl 30% of time Gulf Coast 3-2-1 Refining Margin (1992-2004) Times have changed since the ’90s Structural changes in refining indust
Slide 6: U.S. Gasoline Demand vs. Production
6 U.S. Gasoline Demand vs. Production Gap must be met by imports Production Demand Gasoline Demand Outpacing Domestic Supply Demand growing Supply impacted by Tier II sulfur specs MTBE Phase-outs Gap between U.S. demand and production continues to widen Higher margins needed to attract additional su
Slide 7: U.S./Global Demand Growth
7 U.S./Global Demand Growth U.S. economy growing Increasing number of SUVs on the road More miles driven Gasoline demand growing 1-2% per year (up 1.7% YTD) Nearly all key global regions experiencing strong economic growth China economy booming Economy grew by 9% in ’03; expect 8.2% growth in ’04 Ch
Slide 8: Refined Product Fundamentals
8 Refined Product Fundamentals U.S. Gasoline Days of Supply U.S. Distillate Days of Supply Record low Fairly balanced 2003 2004 5 yr avg U.S.G.C. gasoline margins $7.75 per bbl QTD Currently $11.00 per bbl Full year forward curve around $7.50 per bbl 40% of 2004 distillate production hedged at $4.20
Slide 9: Positive Sour Crude Outlook
9 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 $9.00 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Positive Sour Crude Outlook WTI vs Sour Crude Basket, $/bbl (50% Arab Medium and 50% Arab Light) WTI vs GC Maya (FOB), $/bbl Sour crude discounts at attractive levels Expected to continue Lo
Slide 10: 2004 Looking Better Than 2003
10 Product margins Expected to be around $1.25 per bbl higher than 2003 Sour crude discounts Expected to widen $1.00 per bbl vs. 2003 Throughput volumes Projected to be 350 MBPD higher than 2003 Off to a great start Comfortable with 1Q04 First Call Consensus Full year 2004 First Call Consensus too l
Slide 11: Investing for the Future
11 $1,640 (Dollars in Millions) $1,110 $1,620 $1,320 $910 Investing for the Future Tier II investments expected to be $1.5 billion Strategic projects to increase leverage to sour crudes and clean fuels Significant increase in free cash flow in 2006
Slide 12: Well Positioned for the Future
12 Well Positioned for the Future For refiners who have invested, future has never looked better Strong margins and wider sour crude discounts a powerful combination for Valero Valero already in strong financial position Solid financial ratios Conservative capital structure Valero has all the advant