Hf Sinclair Corporation · NYSE:DINO
Hf Sinclair — HollyFrontier — Non-Deal Roadshow (December 2016)
36 slides from Hf Sinclair's roadshow presentation, December 2016
Slide 1: Credit Suisse Roadshow
Credit Suisse Roadshow December 2016
Slide 2: HollyFrontier Disclosure Statement
HOLLYFRONTIER 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 necessaril
Slide 3: Executive Summary
EXECUTIVE SUMMARY | Diversification into higher value more stable cash flow Lubricants and Midstream businesses REFINING SPECIALTY LUBRICANTS MIDSTREAM •Inland Merchant Refiner •Integrated Specialty Lubricants •Operate Crude and Product Pipelines, Producer loading racks, terminals and tanks in •5 Re
Slide 4: HollyFrontier Pro Forma Footprint
HOLLYFRONTIER PRO FORMA FOOTPRINT | PCLI Expands Domestic and International Reach About Petro-Canada Lubricants Inc. • 15,600 BPD Lubricant Production Capacity • 6 sales offices • 4 warehouses • 21 third party-operated Global Lubricants terminals worldwide Distribution • Export over 60% of PCLI • Ca
Slide 5: HollyFrontier Investment Highlights
HOLLYFRONTIER INVESTMENT HIGHLIGHTS • Flexible refining system and fleet wide crude discount to WTI REFINING • Premium niche product markets versus Gulf Coast • Internal investment to drive growth and enhance returns • Announced Petro-Canada Lubricants Inc. acquisition • Pro Forma, HFC becomes fourt
Slide 6: HollyFrontier Footprint
HOLLYFRONTIER FOOTPRINT | Proximity to North American Crude Production and Attractive Niche Product Markets Five inland refinery locations with 457,000 barrels per day of crude capacity All 5 HFC Refineries Sit Close to North American Crude Production 6
Slide 7: Proximity to North American Crude Production
PROXIMITY TO NORTH AMERICAN CRUDE PRODUCTION | Laid in Crude Advantage • Beneficiary of inland coastal crude discount across entire refining system • 100% of HFC’s purchased crude barrels are “WTI” price based • Refinery location and configuration enables a fleet-wide crude slate discounted to WTI •
Slide 8: High Value Premium Product Markets
HIGH VALUE PREMIUM PRODUCT MARKETS | Premium Product Pricing vs. Gulf Coast $25.00 Regional Gasoline Pricing vs Gulf Coast¹ 2012 2013 $20.00 2014 2015 Average $15.00 $/barrel $12.50 $8.48 $10.00 $8.33 $8.42 $5.00 $3.19 $4.11 $- Group 3 vs GC Chicago vs GC Salt Lake vs GC Denver vs GC Phoenix vs GC L
Slide 9: Business Improvement Plan
BUSINESS IMPROVEMENT PLAN | Increasing Value from Existing Refinery Assets Refinery Operations: EBITDA ($MM) 2015-2018 Reliability: Target first quartile operational reliability, 2016 Baseline target assuming annualized FY EBITDA Target 2014 Target 2016 Achieved YTD¹ Baseline Baseline Annualized 201
Slide 10: Petro-Canada Lubricants Transaction Overview
PETRO-CANADA LUBRICANTS | Transaction Overview Financial Details: • CAD$1,125MM purchase price (approximately US$845 MM) for Petro-Canada Lubricants Inc. • CAD$783MM (US$587MM) purchase price net of CAD$342MM (approximately US$257MM) working capital • Purchase funded with a combination of cash and d
Slide 11: Petro-Canada Lubricants Strategic Rationale
PETRO-CANADA LUBRICANTS | Strategic Rational High Value Products and Stable Cash Flows North American 2015 Base Oil Production Represents ˜90% of North American Production • Specialty Lubricants margins are significantly higher 60,000 and more stable than fuels margins Group III • Differentiated lub
Slide 12: Premium Margins and Global Product Markets
PETRO-CANADA LUBRICANTS | Premium Margins and Global Product Markets, Exclusive and Perpetual License for Petro-Canada Lubricants Brand Product Category Average WTI PCLI Lubricant Volume Based Gross Margin: 2015A Breakdown: 2015A $150 Finished Lubricants • High margin finished lubricants products bl
Slide 13: Integrated Lubricants Producer
PETRO-CANADA LUBRICANTS | Integrated Lubricants Producer PCLI is fully integrated across the lubricants value chain • High quality Base Oils are upgraded to high value Finished Lubricants • Quality of Base Oils allow for unique product formulations • Industry leading product innovation and R&D capab
Slide 14: Historic Realized Lubricant Margins vs Fuel Margins
HOLLYFRONTIER SPECIALTY LUBRICANTS | Historic Realized Lubricant Margins vs Fuel Margins Specialty Lubricants margins are significantly higher and more stable than fuels margins Tulsa Plant increased production of heavier viscosity lubricants and brightstock • Heavy viscosity lubricants enjoy signif
Slide 15: Synergy and Optimization Opportunity
PETRO-CANADA LUBRICANTS | Synergy and Optimization Opportunity Expect US$20MM+ EBITDA in potential synergies by 2018¹ • Tulsa product integration and product upgrade opportunity • Sales and distribution synergy opportunity for Tulsa Products • Transportation cost savings Additional Optimization Oppo
Slide 16: Historical Financials
PETRO-CANADA LUBRICANTS | Historical Financials PCLI Historical EBITDA (US$MM)¹ $300 $250 $200 $150 $MM $100 $50 $0 2011 2012 2013 2014 2015 Annualized 2016¹ Average Annual Sustaining Capex 1) PCLI Reported EBITDA through 9/30/16 annualized 16
Slide 17: Production Capacity versus Demand Fundamentals
PETRO-CANADA LUBRICANTS | Production Capacity versus Demand Fundamentals Positive Western Hemisphere Group III Base Oil Supply / Demand Balance • Shift to premium-grade engine motor oils driving Group III global base oil demand growth • Western Hemisphere Group III demand projected to be 4% CAGR fro
Slide 18: Accretive Transaction
PETRO-CANADA LUBRICANTS | Accretive Transaction Scenario 1 Scenario 2 Scenario 3 EBITDA Accretion (US$MM) HFC EBITDA - 2017 Consensus¹ $ 1,037 $ 1,037 $ 1,037 Expected Petro-Canada EBITDA Range $ 100 $ 150 $ 200 Total EBITDA $ 1,137 $ 1,187 $ 1,237 EBITDA Accretion 10% 14% 19% EPS Accretion (US$MM)
Slide 19: HollyFrontier Pro Forma Specialty Lubricants
HOLLYFRONTIER PRO FORMA SPECIALTY LUBRICANTS | Lubricants Diversification and Scale Sales Volume by Product (BPD ‘000) Normalized Refining EBITDA Split (US $MM)¹ 32 26 13 28 ˜$250 $100 171 172 Other Lubricants Lubricants Distillate Fuels Gasoline $900 $900 228 228 HFC Standalone Pro Forma HFC Standa
Slide 20: Holly Energy Partners Ownership Structure
HOLLY ENERGY PARTNERS | Ownership Structure 1) Data as of 10/3/16 IDR: incentive distribution rights. 20
Slide 21: Holly Energy Partners Business Profile
HOLLY ENERGY PARTNERS | Business Profile Operate a system of petroleum product Consistent Distribution Growth Despite and crude pipelines, storage tanks, $0.70 Crude Price Volatility $160 distribution terminals and loading rack DPU* facilities located near HFC’s refining $140 WTI $0.60 assets in hig
Slide 22: Holly Energy Partners Growth Drivers
HOLLY ENERGY PARTNERS | Growth Drivers Organic Dropdown Context • Southeastern New Mexico Gathering • HEP generally has right of first refusal on all logistics assets HFC builds or • Internal Initiatives acquires • Contractual PPI/FERC Increases • As HFC grows, HEP is positioned to benefit by partne
Slide 23: Woods Cross Expansion Drop Down
HOLLY ENERGY PARTNERS | Woods Cross Expansion Drop Down HEP purchased the newly constructed crude unit, catalytic cracking unit, and polymerization units at HFC’s Woods Cross refinery for a total cash consideration of $278.0 MM • Crude Unit has the capacity to process 15 kb/d of crude into intermedi
Slide 24: Target 8% Annual Distribution Growth Rate
HOLLY ENERGY PARTNERS | Target 8% Annual Distribution Growth Rate Estimated EBITDA Contribution vs 2014 ($mm) 2016E 2017E4 UNEV Growth1 4 15 Internal Initiatives2 7 14 WX Expansion Assets1 8 33 Cheyenne Pipeline Interest1 3 5 Tulsa Crude Tanks1 4 6 El Dorado Naphtha Dropdown1 7 7 Frontier Pipeline I
Slide 25: Cash Distribution Growth Since Inception
HOLLY ENERGY PARTNERS | Cash Distribution Growth Since Inception Total HEP Distributions (GP and LP) Total GP Distribution $200 $50.0 $173 $44.0 $175 $158 $40.0 $150 $144 $36.5 $126 $125 $29.4 $30.0 $99 $100 $23.6 $86 $20.0 $17.5 $75 $68 $54 $49 $12.9 $50 $44 $35 $10.0 $8.1 $25 $4.5 $3.4 $2.0 $0.9 $
Slide 26: Disciplined Approach to Capital Allocation
DISCIPLINED APPROACH TO CAPITAL ALLOCATION SUSTAINING CAPITAL1: • Maintenance capex: $100 - $125 million in annual maintenance • Environmental and Sustaining: $100 - $125 million annual spending currently focused on Tier 3 gasoline and MSAT 2 standards • Turnaround spending: $100 - $150 million annu
Slide 27: Pro Forma Capital Structure and Credit Profile
HOLLYFRONTIER PRO FORMA CAPITAL STRUCTURE AND CREDIT PROFILE | As of September 30, 2016 (US$ millions) Standalone HollyFrontier Capitalization1 Total Debt to Capital1,4 9/30/2016 PCLI Financing Cash and Short Term Marketable Securities $ 471 $ 471 WNR Cash Proceeds from Woods Cross Dropdown1 $ 278 $
Slide 28: Strong Track Record of Cash Returns
STRONG TRACK RECORD OF CASH RETURNS Since the July 2011 merger HFC has returned approximately $4 billion, or approximately $22.80 per share to shareholders • Strong track record in returning excess cash to shareholders • Committed to maintaining competitive cash yield versus peers • Share repurchase
Slide 29: Strong Financial Metrics vs. Peers
STRONG FINANCIAL METRICS VS. PEERS 5-Year Average ROCE1 5-Year Average Net Income Per Barrel2 20.0% $7.00 18.0% $6.00 Avg Annual Return on Capital Employed 16.0% 14.0% $5.00 Average Net Income/BBL 12.0% $4.00 10.0% 8.0% $3.00 6.0% $2.00 4.0% $1.00 2.0% 0.0% $- WNR HFC MPC PSX TSO DK VLO PBF ALJ HFC
Slide 30: HollyFrontier Corporation
HollyFrontier Corporation (NYSE: HFC) 2828 N. Harwood, Suite 1300 Dallas, Texas 75201 (214) 954-6510 www.hollyfrontier.com Julia Heidenreich | VP, Investor Relations Craig Biery | Manager, Investor Relations investors@hollyfrontier.com 214-954-6510 30
Slide 31: Appendix
Appendix 31
Slide 32: Financial Metrics
FINANCIAL METRICS¹ Net Income/BBL Cash Current November 30, 2016 crude capacity 2011 2012 2013 2014 2015 5 yr ave Yield dividend NYSE Close HFC* 8.23 10.68 4.55 3.25 5.44 6.43 ALJ 6.4% $0.60 $9.34 WNR* 2.41 7.24 4.94 8.65 6.64 5.98 PBF 5.0% $1.20 $23.99 PSX* 5.53 5.05 4.55 5.99 5.20 5.26 HFC 4.6% $1
Slide 33: Definitions
DEFINITIONS Non GAAP measurements: We report certain financial EBITDA: Earnings before interest, taxes, depreciation and Return on Capital Employed / Return on Invested Capital: measures that are not prescribed or authorized by U. S. amortization, which we refer to as EBITDA, is calculated as net A
Slide 34: HollyFrontier Index
HOLLYFRONTIER INDEX Please see p. 35 for disclaimer and www.HollyFrontier.com/investor-relations for most current version. 34
Slide 35: HFC Index Disclosure
HFC INDEX DISCLOSURE The data on p. 34 is for informational purposes only and is not reflective or intended to be an indicator of HollyFrontier's past or future financial results. This data is general industry information and does not reflect prices paid or received by HFC. The data was compiled fro
Slide 36: HollyFrontier
HOLLYFRONTIER.