Hf Sinclair Corporation · NYSE:DINO
Hf Sinclair — Holly — Investor Presentation (October 2006)
32 slides from Hf Sinclair's investor presentation, Oct 2, 2006
Slide 1: Holly Corporation Fall 2006 Company Update
Holly Corporation Fall 2006 Company Update
Slide 2: Disclosure Statement
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 necessarily involve ris
Slide 3: Overview of Holly Corporation: Topics in Presentation
Overview of Holly Corporation Holly Strengths History and experience in refining business Experienced management team Strong financial metrics compared to peers Holly's Commitment to Growth / Investment Refining growth in Southwest Recently completed refining projects Refining projects under conside
Slide 4: Overview of Holly Corporation
Overview of Holly Corporation
Slide 5: Holly Corporation Overview
Holly Corporation (NYSE: HOC) Overview Independent refiner in Southwest / Rocky Mountain states Own 2 refineries: New Mexico & Salt Lake City Wholesale marketer supplying West Texas, Arizona, New Mexico, Colorado, Utah, Nevada, Idaho & Washington Also built extensive logistics operations (pipelines
Slide 6: Holly Corporation Overview: Forbes #1 for shareholder return
Holly Corporation (NYSE: HOC) Overview Noted by Forbes magazine as #1 in the Oil & Gas Sector for shareholder return - returning over 80% per year to investors in each of the last 5 years (2001-2005)
Slide 7: Asset Summary
Asset Summary Holly Corp: Holly's refineries operate in the high margin & high growth Southwest & Rockies markets 108,000 bpd of refining capacity All HOC refineries directly connected to Domestic / Canadian crude trading hubs Extensive crude oil gathering network in West Texas and Southeast New Mex
Slide 8: Holly Strengths
Holly Strengths
Slide 9: Holly's History in the Refining Business
Holly's History in the Refining Business 30+ years in the refining business Acquired refinery in Artesia, NM-expanded 4 times since 1969 purchase Acquired refinery in Woods Cross, UT in 2003 Have built extensive logistics operations (pipelines and terminals) to deliver refined products to end market
Slide 10: Experienced Management Team
Experienced Management Team Executive officer group averages over 25 years of refining and marketing industry experience Holly and subsidiary officer group averages over 20 years of refining/energy industry experience Holly directors average over 20 years of refining industry experience Dedicated ma
Slide 11: Strong peer track record: Return on Invested Capital
Strong peer track record: Return on Invested Capital Latest 12 months 2001-2005 average SUN VLO TSO MRO FTO GI HOC 0.314 0.239 0.22 0.288 0.566 0.163 0.616 Strong return metrics compared to peer group
Slide 12: Strong peer track record: Debt to Equity
Strong peer track record: Debt to Equity Latest 12 months 2001-2005 average SUN VLO TSO MRO FTO GI HOC 0.695 0.357 0.549 0.322 0.295 0.688 0 Conservative balance sheet w/ debt capacity for value adding opportunities
Slide 13: Holly's Commitment to Growth and Investment
Holly's Commitment to Growth and Investment
Slide 14: Refinery Capacity Growth to Meet Growing Product Demand
Refinery Capacity Growth to Meet Growing Product Demand in Southwest / Rocky Mtn. Markets 1969 Early 1980's Early 1990's 2003 Wood Cross Acquisiton 2006-07 TOTAL East 0 16 30 65 75 101 0 West 16 14 35 10 26 10 110 0 16k bpd 75k bpd 65k bpd 30k bpd 10k bpd* *Interim Navajo Refinery expansion in 2006
Slide 15: Recently Completed Capital Projects
Recently Completed Capital Projects Refinery Project Benefits Navajo ULSD compliance* 100% ULSD capability ROSE unit +3,000 BPD light products 10,000 bpd expansion +9,000 BPD light products Woods Cross ULSD compliance* 100% ULSD capability Sour-up infrastructure Sets up heavier crude capability *Cle
Slide 16: Recently Completed Capital Projects: on time and on budget
Recently Completed Capital Projects Projects announced in January 2005 with 18 month time frame All projects completed on time & within $3mm of budget Final spending on projects: $123 mm
Slide 17: Project Under Consideration: Navajo Refinery Expansion
Project Under Consideration -- Feedstock Flexibility & Expansion at Navajo Refinery* Proposed Project Summary: Install new crude unit, new gas oil hydrocracker, new solvent de- asphalter, and new hydrogen plant Expand crude capacity to approximately 100,000 bpd Increase ability to capture light/heav
Slide 18: Project Under Consideration: Woods Cross Expansion
Project Under Consideration -- Feedstock Flexibility & Expansion at Woods Cross* Proposed Project Summary: Expand crude unit and revamp for heavier crudes, add a 10,000 bpd gas oil hydrotreater which is expandable to 15,000 bpd and can be converted in the future to a hydrocracker, expand and revamp
Slide 19: Project Under Consideration: Salt Lake City to Las Vegas Pipeline
Proposed Project Summary: Increase refined product outlet to fast growing, consistent annual demand market Probable joint project with Holly Energy Partners-HEP could be ultimate owner/operator Projected Benefits: Allows for possible gasoline & diesel product exchanges between Las Vegas and Phoenix/
Slide 20: Refinery Capital Expenditures by Year
Refinery Capital Expenditures by Year: Major Capital Projects: 2006 2007 2008 Total 1) Diesel Hydrotreater at WX (completed 6/06) $13(1) $13 2) ULSD & other projects at NRC (completed 6/06) 36(1) 36 3) Sulfur recovery unit at NRC 7 10 9 26 4) NRC feedstock flexibility & expansion (2) 10 100 130 240
Slide 21: Holly Outlook
Holly Outlook
Slide 22: Estimated Additions to Pro Forma Refining EBITDA from CAPEX
Estimated Additions to Pro Forma Refining EBITDA from CAPEX Using '03-'05 avg. prices: Recently completed capital projects increase estimated pro forma EBITDA by approx. $50 million beginning in 2006 (as projects phase-in); increasing to approx. $70 million in 2007; finally increasing to approx. $80
Slide 23: Anticipated 2006 / 2007 Tax Benefits
Anticipated 2006 / 2007 Tax Benefits American Jobs Creation Act of 2004: Created tax incentives for small refiners to produce ULSD Provides immediate deduction of 75% of certain capital costs Provides a tax credit based on ULSD production up to 25% of these costs Energy Policy Act of 2005: Provides
Slide 24: Cash Flow at Various EBITDA Levels -- 2006
Cash Flow at Various EBITDA Levels -- 2006 EBITDA $200 $300 $400 $500 Estimated Cash Income Tax <45> <82> <119> <156> CAPEX <111> <111> <111> <111> Free Cash Flow $44 $107 $170 $233 (in millions) Other Key Cash Information: Cash balance at 6/30/06: $233 million Remaining portion of $200 million stoc
Slide 25: Cash Flow at Various EBITDA Levels -- 2007
Cash Flow at Various EBITDA Levels -- 2007 EBITDA $200 $300 $400 $500 Estimated Cash Income Tax <54> <90> <125> <161> CAPEX (1) <195> <195> <195> <195> Free Cash Flow <$49> $15 $80 $144 (in millions) (1) Currently estimated total for anticipated sustaining capital projects and for projects that are
Slide 26: Cash Flow at Various EBITDA Levels -- 2008
Cash Flow at Various EBITDA Levels -- 2008 EBITDA $200 $300 $400 $500 Estimated Cash Income Tax <4> <40> <76> <112> CAPEX (1) <204> <204> <204> <204> Free Cash Flow <$8> $56 $120 $184 (in millions) (1) Currently estimated total for anticipated sustaining capital projects and for projects that are un
Slide 27: Navajo Refining Margins (monthly)
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec East 3.9 5.21 7.33 6.46 4.92 5.48 5.79 5.73 5.1 6.64 6.2 2 West 1.67 2.31 4.05 7 7.46 5.67 0.25 2.08 3.77 2.04 1.43 2.66 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 1.16 2.95 0.35 3.71 3.5 1.93 4.45 6.81 13.89 14.33 3.07 4.43 nrc gm 9.4 9.3 19.05 2
Slide 28: Woods Cross Margins (monthly)
Woods Cross Margins (monthly) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec East -1.09 1.21 5.56 4.32 6.98 2.33 2.87 3.93 -0.67 -0.95 4.97 -0.97 West 3.01 1.52 0.19 5.58 3.93 1.93 4.28 2.13 10.38 5.44 2.56 3.15 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 2.78 1.43 4.97 5 2.74 4.39 1.05 2.8 14.
Slide 29: Western U.S. Supply Production / Logistics Longhorn
Western U.S. Supply Production / Logistics Longhorn
Slide 30: Concluding remarks
Strong management team Strong financial fundamentals Strong industry fundamentals Favorable comparison to peer group metrics Operates in high margin, high growth markets Demonstrated growth ability Capital initiatives to continue growth in place Industry leading return of capital metrics Concluding
Slide 31: Holly Corporation contact details
Holly Corporation 100 Crescent Court, Suite 1600 Dallas, Texas 75201 (214) 871-3555 Steve McDonnell, VP-Chief Financial Officer M. Neale Hickerson, VP-Investor Relations www.hollycorp.com
Slide 32: Definitions
Definitions BPD - Barrels per day EBITDA - Earnings before interest, taxes, depreciation and amortization which is calculated as net income plus (i) interest expense net of interest income and (ii) depreciation and amortization. EBITDA is not a calculation based upon U.S. generally accepted accounti