Delek Us Holdings, Inc. · NYSE:DK
Delek Us — Goldman Sachs Delek CEO Fireside Chat hosted by Neil Mehta (October 2018)
16 slides from Delek Us's conference presentation, Oct 1, 2018
Slide 1: Delek CEO Fireside Chat: Outlook for Crude Differentials, the Permian and IMO 2020
EX 99.1 Delek US Holdings, Inc. Delek CEO Fireside Chat: Outlook for Crude Differentials, the Permian and IMO 2020, hosted by Neil Mehta October 2018
Slide 2: Disclaimers
Disclaimers Forward Looking Statements: Delek US Holdings, Inc. (“Delek US”) and Delek Logistics Partners, LP (“Delek Logistics”; and collectively with Delek US, “we” or “our”) are traded on the New York Stock Exchange in the United States under the symbols “DK” and ”DKL”, respectively. These slides
Slide 3: Permian Basin Outlook: Production Growth
Permian Basin Outlook Production has grown despite volatility of crude oil prices (1) • Steady growth has continued in production- Average Annual Crude Oil Production (Mbpd) and WTI-Midland Price (2) • Drilling supported by improved technology 7.00 $64.76 $65.98 70.00 $61.57 $60.72 and low costs $57
Slide 4: Permian Basin Outlook: Projected vs. Historical Takeaway Capacity
Permian Basin Outlook Projected vs. historical takeaway capacity Takeaway Pipeline Announcements vs. Builds (2015-2017) (1) • Permian Basin takeaway balance is cyclical 2,430k bpd • Production outpaces takeaway capacity and the balance becomes tight • More pipelines get announced • Some of the annou
Slide 5: Brent – WTI Differential Impact on Crude and Product Markets
Brent – WTI Differential Impact on crude and product markets Brent-WTI Differential (1) • US factors: • Increasing light production in US with limited local $10 end markets $8 • Infrastructure moves crude oil glut to US Gulf $6 Coast $4 • Need to clear to the export market $2 • Cushing pipelines bei
Slide 6: Brent – WTI Differential: Transportation Economics Keep Differential Wide
Brent – WTI Differential Transportation economics should keep the differential wide • Transportation economics should play a role in the differential $$6.54-$6.79 • Current break-even transport economics for $7.80-$8.05 exporting from Cushing approximately $6.67 - $7.92(2) • IMO 2020 expected to inc
Slide 7: Brent – WTI Differential: Inventories and Time Spreads
Brent – WTI Differential Inventories and time spreads signal further backwardation • Cushing inventories expected to build through Weekly Cushing, OK Ending Stocks (000 bbls) (1) remainder of 2018 and in 2019 80,000 • Syncrude, turnarounds, Sunrise pipeline 70,000 60,000 • Global inventories also ha
Slide 8: IMO 2020: Current Impact on Oil and Product Markets
IMO 2020 Current impact on oil and product markets • Market is NOT pricing a high compliance rate; only ~60-65% WTI-HSFO Spread (1) • Increased compliance will decrease HSFO demand $0 • Excess supply will go into power generation market -$5 -$10 • Expect to see downside pressure on HSFO curve -$15 •
Slide 9: Delek US Well Positioned for 2018-2022 Trends
Delek US Well Positioned for 2018-2022 Trends
Slide 10: WTI-Linked Refining System with Permian Based Crude Oil Slate
WTI-Linked Refining System with Permian Based Crude Oil Slate System with over 300,000 bpd of crude oil throughput capacity (~70% Permian Basin based) Crude Oil Supply is Primarily WTI-Linked Tyler(1) Tyler, Texas 2% • 75,000 bpd crude oil Crude throughput Throughput WTI 19% 100% WTI • 8.7 complexit
Slide 11: DK Operations Positioned to Benefit from IMO 2020
DK Operations Positioned to Benefit from IMO 2020 Delek US positioned to benefit with high value product yields and crude oil slate flexibility 2Q18 Refiners’ Middle Distillates Yield % (1) (2) (4) • Refining system product yields • Middle distillate: average approx. 119,000 bpd of or 44% (5) 44 mil
Slide 12: Main Drivers of Delek's Expected Performance
Main Drivers of Delek’s Expected Performance Delek US positioned to generate strong cash flows to return cash to shareholders Expected Incremental Benefit from Market Changes (2018 Base) and Company Initiatives/Projects $1,400 $168.4 $227.3 $1,200 $16.4 $75.9 $1,000 $1,038 High $800 $791 $600 Low $4
Slide 13: Current Valuation Below Peer EV-to-EBITDA
Current Valuation Below Peer EV-to-EBITDA DK positioned to benefit from Midland to Brent crude diffs and IMO; low valuation to peer group • Strong balance sheet with $1.1 billion of cash; net debt of $909.7 million; net debt excl. DKL of $177.8 million(1) • Operations positioned to generate strong c
Slide 14: Significant Cash Returns to Shareholders
Significant Cash Returns to Shareholders Focus on returning cash to shareholders while maintaining financial strength Cash to Shareholders(2) • Target dividend level that can be supported through a cycle • 2Q18 increased regular dividend by 25% to $0.25/qtr(1) • Follows a 1Q18 increased regular divi
Slide 15: Investor Relations Contact
Investor Relations Contact: Kevin Kremke Keith Johnson Executive Vice President, CFO Vice President of Investor Relations 615-224-1323 615-435-1366
Slide 16: Non GAAP Reconciliations
Non GAAP Reconciliations Non GAAP Reconciliation of 2018 Projected Net Income to Projected Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) (1) $ in millions High Low Net Income $ 586 $ 369 Add: Taxes 166 102 Interest 127 119 Depreciation and Amortization 159 201 Projected EBI
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