Valero Energy Corporation · NYSE:VLO
Valero Energy — 2009 CEO Energy/Power Conference
18 slides from Valero Energy's conference presentation, Sep 9, 2009
Slide 1: 2009 CEO Energy/Power Conference
2009 CEO Energy/Power Conference September 9, 2009
Slide 2: The Great Recession Hurt Demand, But Recent Uptick Is Positive
The Great Recession Hurt Demand, But Recent Uptick Is Positive 1 Source: DOE Weekly Petroleum Status Report through August 2009, 4-week average Recession U.S. gasoline demand down 172 mbpd (1.9%) 2009 YTD vs. same period 2008, and 2008 was down 204 mbpd (2.2%) vs. 2007 U.S. distillate demand down 57
Slide 3: Consensus Forecasts Show Economic Growth Returning Soon
Consensus Forecasts Show Economic Growth Returning Soon Recession is bottoming - expect stability rest of 2009 and growth in 2010 U.S. real GDP has fallen by a total of 3.9% since the middle of 2008 with the largest declines occurring in 4Q 2008 and 1Q 2009 Recent data improving as 2Q09 real GDP shr
Slide 4: Oil Consumption Grows with Income, Many Economies Growing Rapidly
Oil Consumption Grows with Income, Many Economies Growing Rapidly 3 Sources: Federal Reserve Bank - Dallas Branch; Energy Information Administration, International Monetary Fund; Valero Energy; based on 2007 data
Slide 5: U.S. Gasoline Fundamentals Show Signs of Improvement
U.S. Gasoline Fundamentals Show Signs of Improvement 4 U.S. gasoline days of supply slightly above the past four years Refiners not overproducing U.S. imports down 4% YTD as foreign producers reduce production or find better markets elsewhere September switch to winter-grade gasoline adds supplies t
Slide 6: Expect Distillate Demand to Increase with Economic Growth
Economic growth, approaching winter, and recent flattening of contango should reduce inventories Longer-term, expect global demand growth Economic growth drives diesel demand Growing faster than gasoline worldwide Supply options limited due to fewer substitutes such as ethanol for gasoline Expect Di
Slide 7: Expect Feedstock Discounts to Improve As Crude Oil Demand Grows
Expect Feedstock Discounts to Improve As Crude Oil Demand Grows 6 Sour crude discounts are narrow due to: Lower demand caused by Great Recession OPEC mainly cut lower quality (medium sour) barrels Continued decline in supply of heavy sour crude oils from Mexico Strength in the heavy fuel oil market
Slide 8: With Demand Down, There's Clearly Excess Refining Capacity
With Demand Down, There's Clearly Excess Refining Capacity 7 Source: Industry reports and Valero forecast; 2009 through 2013 estimates are based on consultant averages and are subject to change; includes capacity creep MMBPD Global Refining Supply and Demand Large decrease U.S. and worldwide demand
Slide 9: Valero Positioned with Great Assets and Great People
Valero Positioned with Great Assets and Great People Largest independent refiner in North America Geographically diverse Flexible refining system able to capitalize on and adapt to changing market conditions More than just refining... One of the nation's largest retail fuel marketers with nearly 5,8
Slide 10: Taking Action to Improve Profitability
Taking Action to Improve Profitability Rationalizing underperforming operations Shut down entire refinery at Aruba as well as gasifier complex and coker at Delaware City Previously shut down coker at Corpus Christi and have spared capacity at other cokers Constantly reviewing performance across syst
Slide 11: Significant Flexibility to Shift Operations
Significant Flexibility to Shift Operations Operations Operations 10 Light Medium Heavy Refinery Operating Mode Lightening feedstock slate across system to capture better margins on lighter feedstocks Shutting down and reducing run rates on cokers
Slide 12: Ethanol Acquisition - Timing Couldn't Have Been Better
Ethanol Acquisition - Timing Couldn't Have Been Better Acquired seven ethanol plants out of bankruptcy in 2Q09 780 million gallons per year of world-scale capacity (51,000 bpd) $477 million purchase price is 30% of estimated replacement All seven plants running and profitable ahead of schedule $22 m
Slide 13: Managing for Financial Strength
Managing for Financial Strength Cutting costs and reducing spending Have achieved more than $200 million of aggregate G&A cost reductions since 2007 Streamlining departments and functions Reducing discretionary capital expenditures Expect capital expenditures and turnarounds spending in range of $2.
Slide 14: Bottom Line on Refining
Bottom Line on Refining Near-term profitability will be a challenge for refiners Expect consolidation/ rationalization of refining capacity over next several years There is oil demand growth potential in the U.S., even with CAFE, renewables, and hybrids More people, more cars, trucks, etc. Refining
Slide 15: Why Invest in Valero Today?
Why Invest in Valero Today? Largest, most geographically diverse independent refiner with flexibility to process a wide variety of feedstocks Retail and ethanol making significant contributions Taking action to improve profitability and rationalize underperforming assets Focused on financial strengt
Slide 16: Appendix
VALERO Appendix
Slide 17: Voices for Energy Campaign
Voices for Energy Campaign 16 Retail pump toppers and hand-out cards distributed at Valero marketing sites across the U.S.A.
Slide 18: Geographically Diverse Operations
Geographically Diverse Operations 17 Valero Marketing Presence Three Rivers, Texas 100,000 bpd capacity 12.4 Nelson complexity Corpus Christi, Texas 315,000 bpd capacity 19.1 Nelson complexity Wilmington, California 135,000 bpd capacity 15.9 Nelson complexity Benicia, California 170,000 bpd capacity